How Landlords Can Use Factoring To Free Up Cash

A new financial product has been launched to help more than 2.8 million landlords who might be looking to free up cash in their rental properties.

 

Landlords typically rely on the build up of rental income to generate cash, maybe for household improvements, energy upgrades, pay off debts or acquire additional properties. But the problem is that it takes time for rent to come through, because it is often paid monthly, and landlords may have to chase rent that is overdue.

However, a new product known as property factoring has been launched by London startup, Factored.co – which can give landlords access to immediate cash.

 

The product works similarly to invoice factoring and allows landlords to use their future rental income as security in order to borrow money, with finance of up to £10,000 and competitive rates at 1.45% per month if you take the maximum term of 18 months.

The new business is founded by two young entrepreneurs of David Rabee and Ben Schuldenfrei who have a combined 20 years of experience in the property and finance sector in the UK and they wished to explore a gap in the market.

 

“The problem for many landlords is getting access to affordable and flexible capital,” explains Rabee.

 

Of course, there are a number of ways that a landlord could access finance through personal loans, remortgaging, equity release, second charge loans and even refurbishment loans. But, criteria can be tricky and when you look at things like remortgaging and equity release, they are a lengthy process and can be risky.

 

“Banks can be very restrictive with their lending practices and despite more than 8 million people in the UK being in rented accommodation, there are very few, if any, tailored financial products that apply for landlords.”

“Factored aims to resolve this,” he continues. “Our product is based on factoring, which is commonly used with invoices, and applying this concept to future rental income. Landlords can draw down up to £10,000 of future rental income and put this towards important property improvements, renovations, energy efficiency upgrades and expanding their portfolio.”

 

His partner Ben Schuldenfrei explains the multiple benefits of this type of finance, saying that “Landlords can improve the quality of their properties and make living conditions better for their tenants – and hopefully increase the value of their properties too and charge more further down the line.”

““Our property factoring product is designed for all landlords, of all sizes, from even the biggest and most established to those just starting out.” he says. “And despite trading for less than a year, we have found a few communities who are very receptive to our product and are using it repeatedly, like you would with a typical factoring product.”

“We are excited to scale our business over Q3 and Q4 and introduce more solutions and add-ons to our product.”

 

About Lisa Baker, Editor 2419 Articles
Lisa Baker is the Editor of Always Finance, and writes about Business, Finance Technology and Healthcare. Lisa is also the owner of Need to See IT Publishing.