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Question: Buying home in uk with investors money?

(Posted by: Answer Seeker in UK on 2010-03-03 05:27:13)

Hi, I'm interested in purchasing a home in East Anglia region under the following circumstances: 1. An investor using their credit history to obtain mortgage and providing the down payment 2. My work would be maintaining the property for rentals (ideally to students), collecting rents, managing tenants etc. 3. I would like there to be an agreement in place that after 4 or so years I would have the option to purchase the home from the investor at an agreed cost. Is this very common? Also, where would I locate an investor for such a project? Thanks.

Posted by: joemoser1948 on 2010-03-03, 05:31:53

Investors usually need to see some sort of business plan, and I can't imagine ANY investor putting both his money AND his credit into ANYTHING, particularly not in something with such prospects for a limited return on his money. Looks like you want all the benefits for yourself and no risk. Things just don't work that way. Nice try, but no dice, my friend.

Posted by: Steve D on 2010-03-03, 05:42:38

Your number 3 is going to be the deal breaker - no investor is going to want to limit the profit he/ she can make unless you absolutely guarantee to buy the house at the agreed upon price or pay a penalty. You're asking someone to tie up their money for 4 years on the hopes that you will buy the house at a certain profit. If the house price does not reach that level of profit through appreciation, you will walk away from the deal, leaving the investor with the house. Meanwhile, if prices appreciate more than the agreed upon price, you buy at the lower agreed price and can turn around make a profit just by selling. Ask yourself, if the investor said you had to buy the house in 4 years at an agreed minimum price or whatever the market value is (whichever was higher), would you take the chance that the house would not appreciate to at least the minimum value?