Private investors - how to approach / find

[jconsta6]

Hi all, I confess I've not been on the forums for a while, but I remember the business forums had some pretty savvy people on it - and I'm hoping one of you can help. :-)

So, I want to buy a business - commercial mortgage.

I need a deposit of £138,000.

The business needs investment so i need to keep some cash for that, but could cover the £38k from other sources (below)

I have over 100k in my property which I no longer need as there is accommodation with the new business.

I have tennants who want to buy my property but won't be in s position to for 2 years but prepared to give me a 25k cash payment as a no. Refundable deposit.

So in reality, I should sell the house - problem solved. However I really want to move quickly on this and because I'm getting a really good rental yield ( and profit!!)on this property seems financially daft to do this - especially when I have a tenant who will commit to buy.

So I'm wondering if I may be able to attract private investors to the tune of £100k tgat I could easily cover a 10% return on from my rental income.

It isn't financially viable to remortgage as I'll only get 80% ltv at best which isn't quite enough and would cost more if I was to remortgage the whole amount.

My exit strategy then is obviously pay them off with the sale of the house and or with profits from the business.

Or am I just kidding myself and best thing is just be a git and kick out my Tennants? But seems counter productive to kick out a guaranteed buyer!

Any thoughts appreciated.

Thanks all!

[Ghost91]

I don't think you would be a git for giving notice to your tenants. It's your property and your business after all. Its nice to have a guaranteed buyer but I would imagine your house wouldn't take 2 years to sell, so if you're gonna sell it anyway then may as well be now when you need the money.

[Simpo Two]

The risk to the investor is that they hand you £100K, then you decide to do something else and not pay them back. Or the tenants decide not to give you £25K deposit, or not buy it after all. Promises are meaningless.

Give notice, sell house, buy business.

[jconsta6]

Thanks both - I think that's the reality I'm coming too.

And to be honest is the cleanest solution.

Thanks!!

[jammy_basturd]

Can't you look at an equity release company? They give you a wad of cash in return for a charge on the house.

[jconsta6]

jammy_basturd said:

Can't you look at an equity release company? They give you a wad of cash in return for a charge on the house.

The problem with that is lenders want to remortgage the whole thing. I'm currently on an intrest only deal so it would be comparatively unviable from a cost point of view. Through in my self employed status and it's a none starter.

Hence why I was looking for a private investor with 10% return - works out much cheaper to do it that way.

Oh well, notice to quit is being sent. If something changes I can withdraw it.

Thanks again.

[anonymous-user]

jconsta6 said:

The problem with that is lenders want to remortgage the whole thing. I'm currently on an intrest only deal so it would be comparatively unviable from a cost point of view. Through in my self employed status and it's a none starter.

Hence why I was looking for a private investor with 10% return - works out much cheaper to do it that way.

Oh well, notice to quit is being sent. If something changes I can withdraw it.

Thanks again.

Unless it's someone you know well I doubt very much that anyone will do such a deal for 10%.

They would be looking for 15-25%, with a minimum return and full security over your entire worldly goods, future prospects and your kids, if you have any.

You may get a bridging loan but they are expensive as well.

[951TSE]

How about putting the property up for auction with a sitting tenant? Your reserve would be the minimum £138K you want for the place and assuming it sold the sale would be done and dusted in 28 days. You would get your cash (subject to fees), your tenants would still have somewhere to live and the buyer would not only have instant income but the possibility of the sale to the tenants at a later date.

sounds too easy, there must be a catch.

[jconsta6]

951TSE said:

How about putting the property up for auction with a sitting tenant? Your reserve would be the minimum £138K you want for the place and assuming it sold the sale would be done and dusted in 28 days. You would get your cash (subject to fees), your tenants would still have somewhere to live and the buyer would not only have instant income but the possibility of the sale to the tenants at a later date.

sounds too easy, there must be a catch.

Yeah, too easy - to make the property appealing to investors I'd need to give them a new tenancy... Which I'm then committed to not getting rid for at least a year.

Nope, notice to quit has been sent. :-)

Thanks again.