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  • Peer to Peer Lending

    Borrowing from private investors vs. banks

    Hi. I currently have 4 BTL properties all of which i have fully renovated after buying them cash, renovating and remortgaging to release the cash (very slow process) I also work full time, I'm planning to build my rental income enough to be able to quit full time employment.

    The purpose of this post though is to seek advice/experience from anyone on this forum who has worked with investors.

    My problem is I regularly see good opportunities to purchase properties to make money on after a full renovation, the issue is as these properties are very run down mortgage lenders are very reluctant to lend and bridging loans are very expensive and have the potential to eat up all the profit if anything goes wrong.

    So my question is, can looking for investors be the more relaxed/cheaper way of going forward, because I want to build my net worth and income faster rather than doing just 1 property per year as I am now.

    Thanks in advance.

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    Why not go to a P2P lending platform and put your project on there?  Then its all FCA regulated etc.

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    If you go down this route, you need to be very careful about how you approach it, due to the FCA regulations Vanessa mentions.

    I am not suggesting you are looking at a no money down strategy, because maybe you are still happy to put in cash yourself, and it's possible in single joint ventures, with sophisticated/high net worth individual, or with family and close friends, but you would need to investigate the rules to avoid falling foul of them.

    If you are lucky, John Corey will be along to chime in on this topic, he has build a lot of knowledge in this area

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    If you are lucky, John Corey will be along to chime in on this topic, he has build a lot of knowledge in this area

    Word count doesn't always equate to knowledge.

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    Hi penthouse,

    Whilst it's true that bridging finance used to be expensive, the rates have come down substantially due to increased competition amongst lenders.

    We are frequently quoting rates of 0.75% per month and sometimes lower than that. You are going to struggle to borrow from a P2P platform or private investors/JV partners at rates lower than that. I appreciate that bridging incurs legal and other fees, but for the right deal, I'm certain that bridging finance does not have to 'eat up all of the profit'. If something does go wrong, you may have a problem however you've financed it!

    One option worth considering for a property that is unmortgageable by a BTL lender, is 'bridge-to-let'. We arrange both the bridging and BTL mortgage with the same lender, one valuation fee, bridging rates from 0.49% and a competitive 2 or 5 year fixed BTL rate once refurbished. You can't use these schemes where planning permission/structural alterations are involved, but for the right scenario, they can be very cost-effective.

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