In difficult property market when lending makes it difficult for individuals to purchase property investors can take advantage of this situation by using lease options to acquire property without getting a conventional mortgage from their bank.
A good property investor is one that is able to adapt to any market and put together profitable property deals together using creative strategies such as lease options.
There are many so called property investors that have a hit a brick wall because they're no longer able to obtain mortgages. Some of these investors are foolish enough to think that now isn't a good time to invest in property. However, those that are in know believe that now is the time to take advantage of the slow and somewhat stagnate property market in the UK. These investors are using a creative strategy called lease options that allows them to bypass the conventional route of obtaining a mortgage to buy a property.
Lease options also allow investors to do property deals in which the bank may have refused them on even during the boom. What sort of deals am I talking about? One example is the deals that investors are unable to obtain a mortgage. The investor can go in, fix up the property and then sell it on or get a mortgage on it.
The lease options concept is fairly straight forward. An investor pays the seller a set fee, commonly referred to as an "option fee". In exchange for this non-refundable option fee the seller allows the buyer the right but not the obligation to take full control of the property and buy it at the end of a specified period. The option fee can be as low as £1. The buyer will also make payments to the seller each month; these payments will typically be the market rent. Rent payments above the market rent and the up front option fee payment can be credited towards the purchase when the buyer exercises his option to buy the property.
The investor has a choice, he can either rent out the property to a conventional tenant or he can decide to fix it up (if it requires work) or he can use a strategy called a sandwich lease option.
When the investor chooses to go down the sandwich lease option route he will most commonly place a tenant in side the property using the same concept however charge a higher price than the price he paid with shorter terms. This allows the investor to profit three fold. The investor can charge the new tenant money up front (this will be higher than any money being paid to the seller) and money at the end which will be difference between the investors buying price and his selling price. The investor will also profit from any difference in the rent being paid to the seller and the rent being charged by him to the buyer.
Sandwich lease options if structured the correct way are a true example of how each party can ultimately achieve what they desire. The seller wants to sell and sells to the investor. The investor wants to profit so sets up the deal and buys from the seller whilst selling to a buyer at the same time. The buyer wins because he gets to purchase a property and enjoy the benefits of home ownership that he would not have otherwise done.
Amandeep Sandhu is a UK (London based) property investor specialising in acquiring property using no money down strategies. Amandeep has written a home study programme titled "Secrets of Investing in Property without Money, Mortgages and Risk".
To find out how you can learn the secrets of investing in property without money, mortgages and risk, visit http://www.leaseoptionprofits.co.uk
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