The power of this lies in the fact that the seller has granted you an exclusive right to buy within a defined and agreed time period.  Notice the word “exclusive”.  The seller is not able to sell to anyone else, except you.

At the same time you are able to sell the contract on to another purchaser, transferring the right to buy at the discounted price to them for a fee.

Let’s look at a real example from a North East town.   The seller had been marketing a very large and now empty house for nine months.  With no rental income the monthly mortgage payments of £475 was crippling.

Having started a new business recently and with a need for capital to support it and very little time to cope with an empty property, the seller’s motivation was keen.  After some discussion a purchase price of £93,600 was agreed which was below the marketed price of £110,000 and still enough to clear the mortgage and inject funds into the seller’s start-up business.

The seller was very concerned that he would be unable to make the mortgage payments before the house sold.  A four-month purchase option at £93,600 was agreed and a maximum of four monthly mortgage payments to be made by the buyer, which would be credited to the purchase price at completion.  Once the simple paperwork was signed the option was assigned to a waiting developer-investor for a modest but welcome fee.

Confident that planning would be granted, the developer exercised the option and later successfully converted the building into two flats achieving an end value of £200,000 and about £80,000 in equity after costs.

This case shows how you can profit from property deals that don’t really fit your personal buying criteria, or if as a finder you want to create quick cash.  Simply put, it shows how you can use a purchase option to lock in a discounted price.

Thanks to Mark Jackson, Lease Options Made Simple for this article.

To grow your property portfolio with simple lease options you must understand them.  Lease options differ from purchase options.  They give more freedom.  This freedom allows you the investor to create cashflow and income.  Here are five ways you can use them in practice:

1.  Control your dream property on a simple lease option, live in it until you buy it and rent out your previous home.

2.  Consolidate your own portfolio by optioning out properties you already own but which are out of your area or no longer fit your strategy.  Be sure to agree and document at the outset the condition the property must be returned to you if the option is not exercised

3.  Take control of a property which will create cashflow.  Ensure the rent it can produce is more than the monthly amount you have to pay the owner and other costs.  Aim to generate at least £150 per property per month after all costs.  How many of those would it take to replace your current monthly income?

4.  Build an investment property portfolio which is well placed for strong future capital growth.  Do your research using sites like www.mouseprice.co.uk to target suitable pockets of property which you plan to hold long term

5.  Secure simple lease options on property to which families will aspire – then assign them for a fee for immediate cashflow.  Be careful about assigning lease options agreed with financially distressed sellers, you will quickly damage your reputation.

Positive Points to Consider

• Simple lease options allow you to piggy-back on someone else’s finance – and this can mean huge savings on interest payments
• Simple lease options give you almost the same degree of control you would have if you had bought the property with a mortgage… without the mortgage!

It is becoming clear that there are so many possibilities with the power of options that it may be difficult to know where to start.  Working with experienced option experts who are doing sustainable deals is highly recommended. We would be delighted to hear from you.

Please email me at Mark.Jackson@justdoproperty.co.uk if you want to grow your wealth with simple lease options.

The Top 5 Mistakes Most Investors Make

By Mark Jackson and Wendy Patton

Wendy and I were recently discussing the feeding frenzy and excitement Options have created here over the last 12 months. This enthusiasm is contagious, like wildfire. Fire is friend as long as it serves. It’s wise to build an Options portfolio at the right pace, in the right place and from the right stuff. Sandcastles are pretty until you have to live in them. So if you really want to build something lasting, rather than being caught on the crest of a wave, it’s good to consider your options carefully. That is what Wendy has done.

The Top 5 Mistakes Most Investors Make

1. Letting Hunger Lead

New investors just have to have that first deal. So did I. It cost me £8,000, and the house was later repossessed… You may go through a number of potentials before you find the one that really works for you, one that is solid, safe and sustainable. Don’t rush. Sandcastles are quickly built, but faster washed away. Wendy puts it this way, “don’t become so anxious about closing your first deal thatyou make mistakes which will cost you”.

Perhaps this is one of the reasons why many investors and educators in the UK focus on Sellers in financial difficulty. It’s easier and quicker to get a desperate seller to sign an Option. Which Option deals do you think are most likely to be contested in a UK court? Wendy and I agree that building a sustainable and solid business with those financially challenged is hard work, with the heavy risk of no return. Even sandcastles above the tide‐line will not stand when the spring surge comes.

2. Buying without Backup

Options can be used to invest in property without money and credit, but such backup is the cement of a solid Options portfolio. Wet sand sticks, dry sand runs through your fingers, and the harder you grasp it the faster it flows. If your properties are empty and you can’t cover voids or repairs, your wealth will quickly slip away. If you lack financial reserves make sure your deal is squeaky clean, and that it needs no subsidy to survive. Initially source and offer Options to others, keeping your earned fees as a buffer for your own portfolio.

Consider working with those who have the wherewithal to protect your investments. Hedge Capital Options offers concrete support systems for any investor who wants to ensure deals done today pay off tomorrow.

3. Legal Lack

Expect things to go well, but be prepared for the worst. This approach avoids future loss through court cases. Wendy has been challenged in court often enough, but has yet to be defeated. Her legal paperwork is watertight. Whilst our legislation differs slightly, there are many similarities. Castles in the air will not make you wealthy, good systems, solid procedures and quality paperwork will. Make sure your solicitor knows about options. Have the Seller represented.

Hedge Capital Options (HCO) provides a complete package which includes providing all Legals, meeting Lender requirements, centrally administered payments to Lenders and Vendors, Title management and protection. They do it all for you. If you want to cement your wealth firmly in place and ensure the ebb and flow does not erode it, use such a service; after all, of what value is your Option if you can’t exercise it?

4. False Expectations

Wendy says, “People often say to me, ‘but the market will go up again’” to which I reply, “Really, how do you know?” or “When exactly is it going to start rising again and at what rate?” Basing a future purchase price on an anticipated increase in value could well be a recipe for disaster. An experienced investor will use only today’s value. If you throw sand against the wind, the wind blows it back. Wealth through Options should be by design, not speculation.

5. Learning From Those With Little to Share

It’s not the mountain ahead that will wear you out, it’s the grain of sand in your shoe. Be sure you are prepared for the journey, and equipped to enjoy it. Is it wise to seek advice from those who have not succeeded with Options who do not have it as their core business?

If you are buying packaged deals, be sure the source is reliable. Do your own due diligence, dig. Is the deal well founded? Deals may be sold for considerable money, but look before you leap. Are they really properly protected and sustainable? Or would one wave wash them away?

If you would like to ask Mark a question click here

If you don’t already have a process for due diligence, check ours out: Due Diligence in 15 minutes

Selling property through a Lease Option can also be a life saver! Better than that – Rent to Own as a cash flow strategy can help get your feet back on firm ground! So how does Rent to Own work in practice? How can it benefit you?

Selling on a Lease Option

We all know property pays when it’s held; just as whiskey pleases the palate the longer it’s kept. So selling is not always the preferred route – after all a felled tree won’t fruit. At times though, you need fuel to stave off the cold. You may need to sell. Or you may be so tired of treading water that you are about to give up. Here Lease Options can really shine! You may grant an Option to a trusted investor or to a tenant buyer. Let’s look at these in turn.

Selling to another investor

With their local network and knowledge a distant investor may be better placed to manage and tenant a property far from your home. They may have available funds and the appetite to improve a house which has been neglected, abandoned or damaged. Perhaps they have cash reserves to survive a downturn, whereas you do not.

You want the confidence that the investor is experienced enough to make things work, and will make the monthly payments until the Option is exercised. How do you find such investors? Drop us an email at enquiries@PropertyOptionExpert.co.uk and we will help. Simon Zutshi has developed a network of ethically minded investors through his excellent Mastermind programme and will also be pleased to help.

Selling to a Tenant Buyer

Rent to Own is a simple arrangement whereby the tenant can live in the house and pay rent, but also has a legal document giving them the right to buy the house within an agreed time frame.

Consider some of the benefits of selling to a tenant-buyer

• Home-Owner mindset
  
• Regular rental payments
  
• Extra monthly payments
  
• A lump sum when they move in
  
• No calls about maintenance issues
  
• Freedom to focus on your business
  

How do you find Tenant Buyers?

Advertise, advertise, advertise!
Ads in your local newspaper are one of the best ways. Try something like: “Wanted, local family fed up of paying rent! Rent and Own your own home in xxxxx from just £150 per week. Call xxxxxxx”

Since you are searching for those who aspire to better, put your ads in the “for sale” section.

We have also had good success with leaflets, postcards and word of mouth. Keep the message simple, clear and consistent. When searching for tenant buyers don’t use ugly marketing.

The calls

You might take them personally, have your pa or call centre do so, or use an answer machine service with a solid recorded message. Use what works for you. I prefer personal contact. Be professional and warm.

Showing the house

Arrange group viewings to create competition. Ensure everyone knows that there is a huge demand for this opportunity. You are not selling houses. You are offering opportunities.

Since people are attracted by light, cleanliness and the feeling of space, create these things. Prepare the house for viewings or get someone to do it for you. I recently was impressed by a presentation by Suzy of www.allfourcorners.co.uk. Why not explore what they can do to help.

When your prospective tenant-buyers arrive, greet them at the door. Get them to fill in a simple form with columns for their name, and the amount of money they have to get started in their new home.

Choose Your Tenant Buyer

When you find someone who loves the house, discuss figures, and not before.

You need to agree the Initial Option Fee; the monthly rent (this may increase, encouraging them to buy); and the extra monthly payment (if any). The purchase price can be frozen for any period that works for all. You will want to structure the agreement so that the tenant buyer will have a suitable deposit within the term.

Find out

• Their income
  
• Their credit history
  
• Their track record with rents
  
• How much they have to move in
  

Have them work through and autograph the application forms. At this stage you should be collecting some money to hold the property for them. Do your checks and don’t delay in making your decision as to who gets the opportunity.

Get the paperwork right

Choose solicitors familiar with Rent to Own. For details see our web site

Your tenant buyer will want to take balanced advice before signing the Option paperwork. Ensure your rental agreement is separate from the Option.

Prospective buyers remain tenants until the Option is exercised. If serious problems arise you will evict under a section 8 or section 21 Notice. Because this may be problematic if the tenant claims an equitable interest, you may consider protecting part of the up-front cash paid as a Tenancy Deposit.

Lease Options are like PFDs – good in calm waters or stormy seas. They can keep you afloat and help get your feet firmly on golden sandy shores. Selling on a Lease Option not only relieves you of the headache that often comes with investment property, it can create the lift needed for a deep breath of fresh air! You can hold your head high and strike out for the land or get back on your boat. Lease Options and life jackets have much in common!

But… you know what…?  with a little consideration and attention to each word of this short email (and perhaps you’ll even be tempted to click and watch the video clip that’s been crafted for you) you will clearly understand that “a great catch” is sometimes, disappointingly, a red herring.

But before we get to that – and for just a moment, suppose we were to ask you:  “Are you serious about Lease Options?”  You may be inclined to answer, “Yes!”  If that is so, then please do all you can to join us at our special event June 2^nd.

Click here for more information

Before you secure your place for that, allow us to share a little more about good and bad deals.

As you study the numbers below, ask yourself,

“Is this a great catch, or a red herring?  Fresh lobster or three-week-old dressed crab?  Should I swallow it hook, line and sinker? Do I truly know its net worth?”

A little time invested in this case study will save you literally £housands – guaranteed!

So, here it is:

A nice semi-detached 2 bedroom with a small third office / box room not far from Northampton with Gardens at the back and parking. The house is in excellent order and boasts a new kitchen and bathroom (…baited breath?)… currently empty, the seller wants to move away from this family home

Market Value: £115,000

Mortgage £115,000
Option Price: £117,000
Option Term: 78 months max

Monthly mortgage payment: £350
(currently @ 3.5% tracker )
Market Rent: £550

Hooked?  Does it feel like a great catch, or is something fishy going on?

And what’s the ticket price?  £5,000 as an option fee… plus you have your legals and possibly seller legals to pay… another £1,100… Yes – there’s more to this than meets the eye.  Why is this deal not so swell?

Ask yourself: “Would I buy this deal?”

“How much equity do I have locked in?”

“What about the cashflow?”

“The house is empty. How soon can I find a tenant?”

“How fast will my cash-flow go (evaporate) when the base rate rises?”

Now to really learn good lessons from this and get what makes a deal a great catch – why not take a look at our short clip here?

What you will discover will save you £housands – guaranteed

Regards

Mark Jackson and Wendy Patton

P.S>   go here if you want to get started on crafting REAL deals!
Click here for more information

P.P.S> The  Leeds event June 2^nd will help you sort the red herrings from the real catch!

Just click here to learn more

P.P.P.S>  Buy now you are ready to steal a deal on the ticket price – just use this special discount code on the sign up page – discount25 – See you there!

But the Rainbow itself is real. You must have seen one glowing brightly after a summer storm. Set against black clouds the effect is dramatic and stunning!

When air-borne droplets bend and reflect light from the sun after a downpour the message is clear and reassuring; storms tire and pass.

We can learn much from a rainbow. Consider the process of negotiating an Option Agreement. This can be done clearly and in a way that gives reassurance. Since Options are more about people than property, offers made by phone often fail. A rainbow lives only in the mind of the beholder, so to enjoy its beauty you must be in the right place.

We established during our initial telephone conversation that the Seller is motivated to consider an offer and that the situation lends itself to an Option Agreement.

We have developed trust (remember strong flour from the previous article?) which will help your offer to be accepted. More is involved, though. A rainbow glows only when light, water, air and the eye of an observer work together in a special way. For the Seller to sense that your offer is not too good to be true, but is a real solution, you need to negotiate skilfully.

The Rainbow (Seven Step) System

We see seven distinct layers to a well-defined rainbow. There are seven stages to negotiating a well-defined Option Agreement. If you work through them one by one when you visit potential Sellers you will have great success. Let’s look at each stage in turn, starting with red;

1. Rapport (Red)

Rapport is that ready connection between people who sense they have something in common. Rapport creates a warm feeling and a safe environment, ideal for talking openly.

When you visit the house, thank the seller for inviting you round. If they are keen for you to view straight away, do so. Ask tactfully about their family, work and hobbies. Pat the dog (unless it’s dangerous or flea infested). Notice photographs and ornaments, and comment. Show genuine interest without prying.

2. Frame (Orange)

Ask the Seller where you can sit down to discuss things. Arrange a frame for your negotiation to ensure you get a decision before you leave. With rapport already in place, this follows naturally. Keep it light and upbeat, vibrant. Establish that you may offer a range of suggestions; a Yes or No in response is fine, but a Maybe is not. You want to reach an agreement today. Ask permission to tell them if what they need is beyond what you can offer.

3. Denial (Yellow)

Yellow is the colour of denial. For many sellers, especially when a sale is forced, being open is tough. It takes courage to face reality; to enjoy a rainbow one must look at the clouds. If denial is not worked through, any agreement will be short lived. Gently draw out the needs of the person. Engage with them on an emotional level. Be sure they describe the difficulties they face, not you, or there will be resistance. Ask warmly – “What were you hoping I could do to help today?” Listen to hear and not to answer.

4. Go (Green)

Only when you understand where the person needs to be can you show them the green light. People sell to avoid pain or make a gain. It’s rarely about the money. So, having discovered what is driving your Seller, point them in the best direction. The owner may have three choices: letting, selling or waiting. Eliminate the alternative routes open to them, leaving the one you are signposting. Do this by asking them how they would feel about renting out to tenants themselves or selling through an agent within 6 – 12 months.

5. Deadline (Blue)

Few things play on mind and mood more than a deadline and overcoming the blues can be a real challenge for someone pressured by time. Ask “When would you like to have this problem gone, in 6 months… 12 months? In an ideal world how quickly would you like me to take this away?” The usual answer I get is “within a month”. Reassure the seller that if you are able to rent now and buy later you can do something today! Where there is no deadline, there is little motivation.

6. Financials (Indigo)

Dig in deep and review the financial situation. What is the asking price, the secured (and unsecured) debt, (you need to see some statements) and monthly payments? What is the lowest price they will accept? To contrast wanted price with lowest price ask; “What do you realistically expect to get for the house?”

7. Supposing (Violet)

This is where it all comes together. Don’t vie - let your ideas gently float, like droplets in air, and allow the light to play with them. Keep the Seller with you, moving one step at a time until you find the right angle and she sees the rainbow you’ve created. So only make your offer when you agree that you have found a solution. That way no one gets offended and a “No” won’t kill the process.

Negotiation is an art which can create a powerful message, like a rainbow. Negotiating for Option agreements is rewarding. Often the vendor is amazed at their simplicity and grateful for the reassurance. Against the dark backdrop of heavy clouds the effect can be stunning. The message is clear; storms tire and pass…and for those skilled at helping others… even the pot of gold is real!

Besides distributing a regular newsletter with Option Expert tips for investors in the UK, Mark Jackson and his team conduct regular workshops and offer personal mentoring.

If you would like to ask Mark a question click here

Break-through purchasing plan excites First Time Buyers

If the housing market is an orchard, then first time buyers might be described as honey bees. Vibrant and active, their role is invaluable in encouraging trees to convert blossom into ripe, succulent fruit. Dark skies, cold, and prolonged downpours complicate their task, potentially reducing the value of the harvest. In this time of unprecedented financial gloom, even a ray of sunlight would be welcome! When first time buyers start buzzing with confidence, commentators agree, we will begin to see a return to a healthy market.

At Last – Sunshine!

The sunshine has arrived! This exciting break-through for the UK housing market is causing quite a stir. Why? It allows the first time buyer (and not only first time buyers) to move in, settle down and start enjoying their own home without bank finance. What does that mean? It’s possible to escape the rent rut even without a large deposit, or if you are unable to secure a mortgage in view of strict lender requirements! The solution is called Rent to Own. How does it work?

How it Works

With an initial fee of just 3 – 5% of the agreed purchase price the proud home-owner to be can move in, settle down and start enjoying the freedom and flexibility Rent to Own brings. Rent is paid normally each month with a little extra, an instalment, paid on top. It’s this little extra that builds up over a period of years to produce a sizeable deposit by the time the buyer is ready to secure a mortgage. This is where it gets really exciting. The future home-owner has moved from the rent rut to a position of strength. They have a good deposit, and have had time to clear any issues on their credit file. Now they have bargaining power. Rather than feeling the pressure of having to arrange things quickly, Rent to Own homeowners can move at their own pace, finding the best mortgage on offer. Time is working for them, not against them. This gives peace of mind and confidence, like a burst of warm sunshine through thick cloud.

There is a growing number of Rent to Own specialists in the UK, who can offer a home which meets your family’s needs, goals and aspirations. This may be one they themselves bought previously and wish to sell.

A specialist will also be able to match your requirements with one of many sellers who are keen to help others and sell their property through Rent to Own. Everybody benefits. More and more developers are so impressed with the results Rent to Own brings, that they have been actively promoting and marketing new homes through it.

The Benefits

• Affordability – a small initial fee gets you started
• Easy and understandable legal process
• Free from huge legal fees and costs to start
• Clarity of simple, solicitor approved contracts
• Faster than a traditional purchase
• The freedom to improve the property
• The freedom to enjoy the property as your own
• The security of a fixed purchase price
• The satisfaction of gaining from increased value
• The freedom to walk away if you want

The opportunity for first time buyers, divorcees or others, who might struggle to get a mortgage, or are unable to afford the deposit for that dream home, is huge. Granted, Rent to Own will not excite every one. But it is already creating quite a buzz among those looking for a simple way out of the rent rut and into their own home.

For landlords too, it’s reassuring to know that the light at the end of the tunnel need not be the train coming towards them. Rent to Own attracts first rate tenants who care for the house as if it were their own home. It gives peace of mind and a degree of security and certainty to both buyer and seller. It is a gift for those who dream of owning their own home. Rent to Own brings the sunshine home.

If you would like to ask Mark a question click here

Following the sell out launch in Birmingham they have announced further dates and venues. Places are limited, so please act quickly.

Manchester – Wednesday 17th March
Fairways Lodge Hotel, George Street, M25 9WS

Birmingham – Friday 19th March
Crowne Plaza, NEC, Pendigo Way, Birmingham, B40 1PZ

London – Tuesday 23rd March, Cumberland Hotel
Great Cumberland Place, London, WC1 1LZ
(same day and venue as property investors’ network evening meeting)

To book on any of these courses simply email support@hedge-capitaloptions.co.uk quoting JUST DO PROPERTY.

Bookings will be accepted on a “first come first served basis”. Joining instructions will be issued nearer the dates.

Here is some of what you will learn on the day:

• The risks of Options (what they don’t tell you at expensive seminars) and how the Protected Lease Option™ guards you against those risks
• Creative deal structuring – How Options differ from BMV investing
  Building deals – real case studies dissected
• Effective, low-cost, “start-the-next-morning” marketing for productive leads
  How to get exhausted landlords begging you to work with them
• How to benefit from responsive laser-targeted market sectors
• How to qualify your leads in 3 minutes or less
• Simple techniques to increase your lead conversion by 300%
• Powerful but fair negotiation
• Using the power of listening to forge the best deal
• Why Sellers love the extra security of the Protected Lease Option™
• How Hedge Capital Options will protect your investment and ensure you can get your PROFIT out when you want!

If you want to stay ahead of the game, please you book your place now as places are limited.

The investment cost of this information-packed day is just £99, and includes lunch and refreshments.

What you will learn is of high value and powerful.

As your partner, Hedge Capital Options will provide:

• Training and on-going support – tailored to maximise your success
• Use of the closed Hedge Capital Options forum
• Full and exclusive use of the bomb-proof legal paperwork systems
• Freedom for you to write more deals – Hedge manages the lenders’ legals, insurance, payments to the lender and the seller and solicitors, centrally
• Title control throughout the term, protecting your profit
• A guaranteed profit share – even if you have to stop making the monthly payments or lose interest in property!
• An indemnity covering legal costs if (it will happen…) the vendor contests your right to exercise the option

There are no upfront costs for working with Hedge Capital Options and having the Protected Lease Option™ working for you.

Hedge Capital Options only makes a profit when you decide to exercise the option, by taking a 25% share of the increased equity at that time.

What Hedge Capital Options wants from you:

• You write as many profitable Option deals as possible in the next 12 months
• You use the support and training we provide
• You use the Protected Lease Option™ system for all residential property lease option deals you create during the next 12 months – if they are longer than 1 year
• You offer us the opportunity to buy the option from you when you decide to unlock your profit
• You cover your own legal costs (though we will help with that if you can’t)

To get started with building real wealth, email

support@hedge-capitaloptions.co.uk quoting JUST DO PROPERTY.

If you click on the following link you can listen to an interview with Mark Jackson and John Davies discussing how the Protected Lease Option™ can benefit you.  If you want to write options, you will want to write them well.

www.hedge-capitaloptions.co.uk

Please see just a few of the comments made by those who attended the Birmingham launch below:

“Fantastic day and very well put together. Definitely for me. “ Chris Keye

“Have done the course today, do it.  You won’t be disappointed” Neil Cox

Conditions of booking:

1.    The event is payable on the day – please bring a cheque with you for £99, payable to Hedge Capital Limited.

2.    If you book a place and fail to attend on the day an invoice for £99 will be emailed to you.

3.    You will be requested to sign and submit a confidentiality agreement on the day, a copy of which will be returned to you.

Mark Jackson's Top Tips

1. Have the right attitude – and keep it:

Develop a successful attitude by actively creating a positive mindset, working on your self-control, becoming more disciplined, focused, and by learning from your mistakes. Crowd out weeds of doubt and inactivity with action and expectant belief.  Cultivate the mind and create an orchard. You can do this by reading both property investment related books and self-development books like Feel the Fear and Do it Anyway and Eat That Frog!. Be sure to put some time aside for yourself every day – just thirty minutes is a good start – and focus on what you want to achieve and how you are achieving it. Write your goals down and put them where you can see them. The time I give myself every day acts like a keel which keeps the yacht stable when the sea swells get rough.

2. Network for success:

A sponge absorbs whatever surrounds it. When you associate with like-minded people your growth and progress skyrockets.  Embers glow and warm only when they are together, take one away and it soon cools and dies. Simon Zutshi’s PIN networking events are the biggest in the UK and offer you a chance to learn from speakers’ presentations as well as meet people you will connect with.  Is it wise to take the person sitting next to you on as your mentor if they’re just starting out in property investing? Perhaps not, but meeting such people is powerful, enriching and through networking you can grow together and share your learning.

3. Learn from the experts:

If you want to be successful then get the right training!  This is true for any field, not just property investment. Learn from the best by spending time with somebody who is a specialist in your chosen field, even shadowing them as they go about their daily business. You will also learn much faster through experience when you’re associating and joint venturing with somebody who is already successful. Consider getting a coach who will be able to answer all your questions, or investing in a good course.  Always ensure your mentor is an investor who is actually doing deals in the UK and not just teaching theory.

4. Take it one step at a time:

This might sound like a contradiction to my earlier point, but be careful where you spend your money. It’s tempting to spend thousands of pounds on courses and seminars (and there are many people who would happily relieve you of your hard earned cash) which could be better spent investing in property. Many courses give information that is too advanced for a beginner investor’s needs, so be selective.  Cool your engines and do one course at a time, implementing what you learn and only allowing yourself further learning when you start making money from the new skills and techniques already gained. Make sure the presenter has a track record of successful deals, as well as being a great teacher.

5. Enjoy the journey:

You will make mistakes, everybody does. An expert is someone who has made all the mistakes in a narrow field.  Learn to laugh about them, to know that it is acceptable to make mistakes – that’s how we learn.  Just enjoy the amazing journey that is property investment! Isn’t that, after all, what this is all about?

If you would like to ask Mark a question click here

Described as the Power Steering of property investment, Options are powerful problem solvers and cash-flow creators. Though not suited to all situations, they are transforming the way investors view and transact residential property in the UK. They can fast-track you to financial freedom.

Property Options in Brief

Purchase Options, Lease Options and Sandwich Options are becoming familiar terms with Property investors. Perhaps you are already using these powerful legal agreements to add to your portfolio, to generate cash-flow, to sell property which might otherwise stick, or to secure your family home.

Understanding Property Options and using them with skill is important. Why? Because Options can open locked doors, or become trap-doors.

Property Options in Essence

An Option gives choice and freedom. Depending on the wording of the document, a Property Owner (Optionor or Grantor) grants exclusive freedom to buy, use or sell the Property, or a combination of these freedoms. The Buyer (Optionee) can choose to buy, or not to buy during the term of the Option. Should the Buyer wish to buy, the Seller must sell. That is the essence of an Option.

Essential Ingredients of Option Agreements:

• a willing seller;
• a written document;
• a specified period of time;
• an option fee;
• a purchase price; and
• a willing buyer.

Property Options fall broadly into two categories;

• A Purchase Option is often short-term and grants the holder the freedom to buy the property at an agreed price within a specified period of time.
  
• A Lease Option is a Purchase Option together with a lease giving the added freedom to use the property during the term

A property owner may grant a Lease Option to a tenant, (the tenant now has an Option to Buy) allowing them time to save a deposit, arrange finance, add value to their home and or wait for the property to appreciate before buying. This “tenant buyer” can choose the best time to “exercise the option” and buy. This is known as ‘Rent to Own’, or Rent to Buy.
When two Lease Option agreements run at the same time we have a Sandwich Option or Double Lease Option. The property owner grants an investor a Lease Option and the investor grants a second Lease Option to a tenant buyer. This effectively means the investor can control property and sell it without even owning it.

Property Options in Control

Option holders who take a property on a Lease Option will make a regular payment to the Owner or pay the Mortgagees direct on their behalf. This is a bit like piggy-backing to get through a muddy patch.

Lease Options can help these people move on;

• Tired Landlords
• People who need to relocate
• Divorcees and others who have separated
• Home-owners struggling to maintain mortgage payments

They can help these people move in;

• Upsizers
• Investors
• First time buyers

Options are not without risk. This is generally limited to the Option fee (a payment making the Option binding at the outset) and any costs incurred during the Option Period. You need to be sure your Option Agreements are properly drafted, that they are fair and transparent, otherwise you may not be able to exercise them.

Options should create cash-flow, since the monthly payments to the Seller or the Mortgagee would be lower than payments taken as rent. If property prices increase, you also benefit from the capital growth.

Property Options in Practice

Option agreements can provide relief for homeowners in many situations. Take Ms D and her partner. They own a two-bed semi with a conservatory and well kept gardens in a good part of County Durham but had moved 40 miles away to settle in a rural location. They were unable to sell the house. Concerned about vandals and burglars their quality of life was suffering. Unwilling to become landlords, they were paying £490 a month for an empty house.

Rather than allowing the situation to spiral out of control, they granted a 48 month Lease Option with the purchase price set at £97,000; less than the marketed sale price. We contribute £300 a month, which covers the interest on the mortgage. An excellent tenant cares for the property. We benefit from a modest £120 profit a month.

We intend to buy the property when the market recovers. If it doesn’t, we will negotiate an extension with Ms D, or allow the option to lapse or expire. In this case, and by mutual agreement, the house will be returned in excellent condition. We will have benefitted from the cashflow, and Ms D will have had 4 years of peace of mind.

Rent to own goes a step further. It is a simple arrangement allowing a tenant to live in the property, paying rent in the usual way. In addition the tenant has a legal document giving them the right to buy the house within an agreed time period at a set price. Tenant Buyers tend to be people who can’t get a mortgage immediately, or don’t yet have the needed deposit, but have a strong prospect of securing finance in the future. The money paid when they move in, together with the monthly instalments, goes towards creating their deposit.

Imagine you own an investment property which owes you £100,000 and the value now is closer to £90,000. With an Option you might set the future purchase price (to be paid within, say, 48 months) at £110,000. When your tenant buyer moves in you collect an Option Fee of 3-5 per cent of the agreed purchase price; collect market rent and monthly instalments of up to 20 per cent of the rent. When the Tenant Buyer decides to exercise her Option and buy, the Option Fee and monthly instalments become the purchase deposit.

Selling to a tenant-buyer in this way has many benefits. Late payments and void periods are extremely rare. The responsibility for day to day maintenance and improving the property lies with the future buyer who takes pride in his home. This home-owner mindset safeguards your cash-flow and frees you to focus on other aspects of your business. Giving back to the community by helping local families own good homes is rewarding.

Property Options and You

Option Agreements are transforming the way we buy and sell property in the UK. You can control a substantial portfolio without the need for personal mortgage debt or liability. Hard pressed landlords can re-organise their finances and transform portfolios. Through Rent to Own, Property Options are opening doors for potential home-owners when finance is not readily available.

Investing this way may well be an Option you can’t refuse!

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