Are you saving up to get into property?
A friend of mine (Tom) told me he is saving up to “get into property”. From experience I have leant that people outside of the property world do not like talking money, so i simply asked him a few polite questions. After a short while Tom explained the bank would only allow him to draw down £150,000, which was far too little to buy anything sensible in the South of England. Hence he needed to keep saving.
If your reading this blog and are already into property you will probably already be saying something like ” But that can be used to borrow another £300,000 so Tom could be looking at developments up to £450,000!.
If you are not yet into property I would expect you to be agreeing with Tom. I’d have to agree to, after all, there are not many houses around for £100,000 to £150,000 in the South of England.
I decided to open up to Tom and share with him how I make my cash pot of just £40,000 stretch into property projects of £300,000 to £400,000. .- Just to be clear that’s forty thousand pound of real cash being used for property projects of three to four hundred thousand pounds.As i did so, I could see the look of polite disbelief in Toms’ eyes It’s a lot to accept, especially as Tom is the kind of person who evaluates, cross checks and documents everything.
As I explained to Tom how it is done he came up with lots and lots of “Ahhh BUTs”. I answered them as and when he asked but after going right through it, I could see Tom was still not convinced. I went through it a second time. The third time we drew it out on a sheet of paper. This time I got more Ahhh’s than “Ahhh BUTs”. I though. Cracked it Tom has got it.
A week later I found a possible property deal needing £330,000 and returning £380,000. So I dropped Tom a text and asked if he fancied going through it with the aim of doing a 50/50 JV? Tom’s quick reply was “You need £165K but I only have £150k so I cannot do it”.
I’ll keep working with Tom and leave you with this quote from Henry Ford.
“Whether you think you can, or you think you can’t—you’re right.”
Happy Property Hunting