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

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!

Out of the 8 Estate and Letting agents that attended the Lease Options meeting that Mark and Julie Jackson ran for us, we are working closely with 2 agents.  This is what had been predicted prior to the meeting, so it’s all going according to plan.

We are working with Clive a local Estate Agent, he’s brought 2 deals to us so far.  Unfortunately both deals didn’t fit the criteria as they were both 1 bed apartments, which, as you know are not good for investment properties.  Clive has really grasped the concept of lease options though and I’m sure they’ll be more deals coming through.

We’re also working with a letting agent called Purple Cow, Claire and Francis are joint partners.  They too have really grasped the concept.  Its early days but they are already thinking of possible deals that we might be able to do.

I feel that Mark really opened their eyes as to what was possible with the power of the lease option. They can see that it offers a solution for their clients and they will get paid in the process too.  Lease Options are such a powerful tool for an investor’s kit bag.  I’m really looking forward to doing my first one!

I’m working my way through the Lease Options Course which is excellent, I’ll review the course when I’ve finished, but so far it has given a lot of useful information.  I have also got an audio from Mark Jackson’s Lease Options workshop back in January.  This is a great resource as you can listen to it in the car, it really immerses you into the world of lease options and gives you a lot more confidence to go out and actually do a deal!

We had a small informal meeting of about 8 agents. Gordon Downey a property investor from the South also came along – actually Wendy Patton calls him Sean Connery!

The meeting went really well and we received a very positive response. Lots of constructive questions were asked but they were all very positive.

They could really see how they could benefit from sending prospective leads to their local property investor (i.e. me!). Their eyes lit up when they saw that they could still make their commission and help the seller at the same time.

This way of getting lease options deals is amazing and I think if you can get the message across to your local agents you’ll never be short of leads. Maybe you should take them out for a coffee and introduce the concept to them. A big tip is to make sure you get across that they’ll still be making their commission.

We’re starting the Lease Options Made Simple course by Mark Jackson and Wendy Patton, so we’re excited to be learning a lot more about lease options. Then we can fully utilise the leads from our local agents.

So we attended Lease Options Made Simple Live on Saturday to find out more, and it was excellent.  It was run by Mark Jackson (UK Lease Options Expert) and Wendy Patton (top US Lease Options Expert). Mark and Wendy are a great double act! With Mark’s soft Welsh tones and Wendy’s (slightly louder than soft) American accent it was hilarious.  Wendy was trying to make sure she adapted her style to us ‘quiet’ Brits, I think she found the room to be anything but that.

It was a large meeting with about 130 people in the room. There was a lot of content during the day and a lot to take in if you are new to Lease Options, as we are.  The concepts are so simple but so clever. It seems like a fantastic solution and a win/win for both the seller and the investor.  I like Mark and Wendy’s ethics about deals also.  They are both very conscious of making sure they offer a fair solution to the seller, to ensure that the seller is left in the best position.

They also did some live calls, where they called people up from adverts in the paper.  This was great as it gave you the confidence to know that you could do this too.  It was also very amusing and we all had to be quiet whilst they made the calls.

Who's stolen my phone?

Wendy gave some case studies throughout the day, with testimonials from some of her students.  They were making a large amount of money from implementing Wendy’s strategies.  There was one guy in India who had made over $32K in 6 months by doing cooperative deals. He was doing deals in the US by using the telephone from India. That must be an unbelievable amount of money for somebody living in India.

John Davies, from Hedge came along to talk about the Protected Lease Option, which is an interesting concept.  It offers peace of mind to the investor to ensure they are correctly putting the lease option deal together. They are only paid on the back end too, so there’s no up- front costs just a share of the back end profits.

We did some great networking and met some fantastic people as you always do at these events. We were talking with Richard, the Editor of Property Investor News and he’s a great guy who offered excellent advice and help. Of course the best networking is done in the bar after the event, and we did quite a bit of that too!

One thing for sure is that if you actually take action and implement the lease option strategies correctly then it’s a great tool for your property investor’s kit bag.

Mark and Wendy launched their new Lease Options Course during the seminar. We’ll bring more details of that shortly.

Is Rent to Own Sunshine at the End of the Tunnel for First Time Buyers?

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

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!

If you would like to ask Mark a question click here