“Lease Options in the UK are not worth the hype”
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. Its 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, its 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. Dont rush. Sandcastles are quickly built, but faster washed away. Wendy puts it this way, “dont 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. Its 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 cant 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 cant 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 todays 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
Its not the mountain ahead that will wear you out, its 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 dont already have a process for due diligence, check ours out: Due Diligence in 15 minutes