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How do you raise initial capital?

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Hi all –

I have been listening to Rob(s) podcast for a while now and have been doing a lot to try and educate myself on the ins and outs of property investing for beginners. I feel like I have a learnt so much over the past year, but I have the biggest frustration of not being in a financial position ready to start my venture.

I have recently purchased a house (joint mortgage with my partner) so have limited equity available to release from that. I earn a decent enough salary that I am able to put away around £8-£10k / year. That does however still leave me a few (3 minimum I would have thought) years away from having enough capital to get started.

I live in West Yorkshire so I know the Leeds market inside out, I am looking to get a foothold in this rising market – most likely a renovation that I would then look to create a positive cash flow through renting out.

In order to get me there quicker, I would be interested in gathering peoples thoughts on this approach? Is there something else I may be better looking at, perhaps that would require a lower amount of capital to get started with? Or looking at the problem from the other direction, a lender that is prepared to lend above the usual 75%?

Any and all thoughts would be greatly appreciated.


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  • 1 month later...

Cut down ALL of your living costs and special treats ( you know take aways, holidays ect ). Work more hours, even if for a second job to increase your income - perhaps in a letting agent or estate agent on weekends - no one likes working weekends... Could also offer a nice sourcing possibility, quite a few landlords letting houses are keen on selling...

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I would also counsel you to not consider taking anything much above 75% LTV.

At that level, should things go bad, you should have some wriggle room.

During the last "boom" phase, there were offers in excess of 110% LTV, eagerly snapped up. Then it all went wrong and those people had nowhere to go.



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There are a few more lenders entering the 80% LTV space but it depends on your risk profile really but that's a start hopefully.

There are a few things I've done to help build up my deposit in the past that can easily add some more money to the pot, but only do so if you are strict enough to manage them and pay them down. I've used a combination of these over 2 previous purchases but only when the cash flow was still positive. 

0% credit card for purchases - you can generally get around 2 years interest free on these at the moment, simply pay for EVERYTHING on them and save up the equivalent cash you'd be spending. Might take a few months, but you'd be surprised how quickly it builds up. 

Cash transfer credit cards - for a quicker route you can get a 0% credit card with a low cash transfer fee. I got around 5k from one for a 3% fee. Over the 24 months that equates to borrowing at 1.5% so probably amongst the cheapest you will source money (as long as you can afford to pay back at the end of the term, otherwise the balance transfer fees will make this much less attractive. 

Personal loan (including P2P) - if you have good credit you can get these on reasonable rates too at the moment. I've done around 12k on a previous purchase at around 4%. If you feel your investment is going to be better than that, then it's something to consider. I used Zopa and the flexibility of overpayments was brilliant. Challenged myself to pay it off ASAP and managed to within around a year rather than the proposed 5 year term. I also got the load though a cash back site, so got a small payment back for that too (free money if you're going to be doing it anyway!) 

With all of the above though the key thing is to make sure they fit your level of risk and are affordable. Let me know if you want to discuss any more detail. 

I'd be interested to hear any other ideas too as I'm currently lining up my next purchase too. 

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Thanks very much for your replies, very helpful indeed.

The strategy that I am leaning towards at the moment is looking at low end BTLs, most likely in Bradford/south Leeds/Hull, purchasing for below the £45/50k mark. The properties will require a small refurb (<£5k) giving the opportunity to add value and then let these out creating a positive cash flow of minimum £200 pcm. Ideally, looking to remortgage and get some (realistically not all) money out of the deal and then look to replicate this approach whilst implementing learnings from the first.

This approach would require me to have a modest amount of capital (below £20k) l to kick things off whilst it creating a positive cash flow.

Any thoughts, critique would be most welcome.


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Hi Andrew 

All sounds good as long as you are happy the rental demand is there for them and the fundamentals are sound. 

Only point of caution assuming you'll be getting a BTL mortgage for the rest is just to be aware that a lot lenders have minimum loan amounts, which in turn drives a minimum purchase price. With so many lenders in the market these days though there might still be options available for you so just have a quick chat with a broker to see how its looking as early as you can and see if the strategy stacks up. 

Best of luck with it all, and let me know how you get on :)

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