MyPropertyPowerTeam
Find your next rated tradesperson
Find a Tenant The Business Pages for Property Investment Current and archived property articles Join in our Property Investment and Landlords Forum and have your say! return to my property power team home page Services for Landlords Buy to Let mortgages and legals Find your next investment Prosper with Property Education Property Investment networking opportunities
articles > Get Paid 3 Times in the Same Deal!

Article > Get Paid 3 Times in the Same Deal!


Article kindly supplied by Mark I'Anson

www.markianson.com

Mark I'Anson Property Limited,
183 Watling Street West, Towcester,
Northamptonshire, NN12 6BX
08456434595

 

How would you like to get paid 3 times in the same deal?

If you'd like to have the right to purchase a property or even a piece of vacant land at some point in the future, but pay a price you determine today, you need to seriously consider using the pure option. The option agreement is really a very simple document that spells out in explicit detail the terms under which you could purchase a property. The beauty of the option is that you can decide today how much you're willing to pay for a property without having to pay for it or even decide whether you want it for a period of time -- sometimes years into the future.

Let me give you a good example of how you might utilize an option. Pretend for a moment that you've heard a rumour that an exciting new development may be coming to a specific area. While it's far from certain whether or not it will actually happen, if it does, property values in that area will skyrocket. Wouldn't it be great if you could lock in an opportunity to cash in on future appreciations in property values and pay today's prices tomorrow? With an option agreement you can.

 

Want to know more about 'The essential skills of a Property Trader'?


Dominate Your Ground The Essential Skills of a Property Trader
An excellent grounding in getting leads, converting deals, trading deals and guerilla marketing tactics.

 

 

Think about the possibility that a motivated seller might be willing to give you an option on their property in exchange for something you may not really need anyway. That's why it's always a good idea to listen closely and carefully to what people tell you when you're involved in discussions with them about their property. Just by listening, you can learn a lot. So keep your ears open, and be prepared to think creatively!



Done correctly, the lease option agreement can give you a tremendous amount of flexibility as well as multiple streams of income. One of the most beautiful aspects of the lease option is that you can purchase a property under the terms of the lease option from a motivated seller and then turn around and sub-lease the property to another party. When you sign a lease option agreement with a motivated seller, they're going to want you to give them an option consideration. Some people may call it a down payment. In addition to this amount, you'll also be agreeing to make monthly payments to the property owner for a predetermined period of time, such as seven years. If you fail to exercise your option to purchase the property within that period of time, you'll lose the money you gave them as an option payment.

There are three exciting profit centres when dealing with a lease option. When you sub-lease the property to a tenant buyer, you'll collect a deposit from them at the time that they sign a contract. Depending on market conditions and their ability to pay, you can generally collect option consideration amount of £3,000-£5,000. This is an excellent way of immediately getting back any money you may have given to the original seller of the property when you signed your contract with them.

In addition to option, the second profit centre you have with a lucrative lease option agreement is the spread - the amount between your mortgage payment amount and your tenant's rent. This amount could be as little as £100 per month or as much as several hundred, depending upon the details you work out with your optionee. The final profit centre is the one with the greatest potential for massive profit. This is also a spread amount, but in this case is the difference between what you agreed to pay the seller of the property and the amount that you have agreed to sell the property for. For instance, if your option agreement with the seller of the property gives you the right to purchase the property for £100,000 and you have agreed to sell it for £130,000, the difference is £30,000. When the transaction is closed, you will realize a £30,000 profit. There are ways to sweeten the pot by offering a £5,000-£10,000 discount for exercising the right to purchase the property very early in the agreement.

As you can see very clearly, three profit centres make it a good way to receive a large influx of cash when you initially sign the agreement, as well as an ongoing stream of positive monthly income during the rental phase of the contract, with a huge bonus paid to you when the option is exercised. When those three streams of income converge, the potential could be a river of cash flowing into your bank account.

Want to know more about 'The essential skills of a Property Trader'?


Dominate Your Ground The Essential Skills of a Property Trader
An excellent grounding in getting leads, converting deals, trading deals and guerilla marketing tactics.

 

 

 

 

 

 

 

 

Bookmark and Share

 

 
© 2018 My Property Power Team | privacy policy | terms & conditions | contact us | advertise |