House sales – Property Options
Since the demise of Home Information Packs, the housing Market is somewhat flooded with an over supply of property. Houses are selling, but not as fast as most people would like, many properties being on the market for many months and even in some cases, years.
The only tool that an Estate Agent has to offer the vendor is to reduce the price of the property. Reducing the price drastically nearly always brings a sale, but the discount has to be in the region of 25% to 30%. At this level you bring into play the Property Investors who can play around with finance own the property with No Money Down.
Recently there is a new breed of canny investors who have a range of offerings to enable the property to be moved on.
One of the main reasons that property is not moving is insistence on large deposits from purchasers often in the range of 25%. Which first time buyer has £30,000 to £40,000 sittings around to put down on a home? For these people a ‘rent to buy’ is a good option. In essence the rent to buy tenant contracts to buy the property at a future date, but in the meantime lives in and looks after the property as if it were their own. The Options Investor is the middleman who sources the property and rent to buy tenant and ties the two together.
The Options Investor has a range of tools at their disposal to acquire property depending upon the vendor’s situation. Some examples of recent Option deals are an elderly couple wanted to leave their family home that they had lived in for over 40 years, the property looked tired and needed bring up to modern standards. They wanted to move to a bungalow in more rural setting. A mortgage was arranged for the bungalow in the vendors name, but the investor would arrange to pay the mortgage. The current market price was set as the value that the property would be sold at when the Option was processed, i.e. the vendor was getting 100% of the value of the property. The option period was set for 5 years.
A Tenant Buyers were found who arranged to do some work on the house in return for a months rent. They paid a ‘getting-in fee of £3,000’ much less than a mortgage deposit. Their rent will cover the mortgage payment on the bungalow. A price to purchase the property was negotiated with the Tenant Buyer that would be less than the expected price at the time the option would be processed. The Tenant Buyers could exercise the option any time within the five years.
The vendor was happy because they were in the bungalow that they wanted, the Tenant Buyer was happy because they were in a property which they would not have been able to consider purchasing, at a cost less then the expected market value. The Investor was happy because he was able to pocket the difference between the two selling prices, (original vendor and Tenant Buyer). He also took part of the deposit and any difference between the rent paid and the mortgage paid out.
This is just one of the many tools that an efficient Property Option Investor can offer. Property Options offer a Win, Win, Win situation.
Written by Mike Edward of Move Enabler
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