Would you like to hear more about money that automatically comes to you whether you work or not? What if I told you that you can buy a house with very little or no money with which to invest? Read on…
In ‘Income To Make You Rich Pt 3’ I spoke about the fact that passive income is the ultimate investment, allowing you to put your feet up and have your cashflow on autopilot. This is what the super rich do, regardless of their individual professions. Almost all of them, without exception, invest a portion of their wealth in property/real estate. Why?
It’s because it is the ultimate investment vehicle, with the most favourable tax advantages. The returns are so much better than leaving your money in a bank, where you simply won’t make the kind of money that can be made from investing in a place for people to live and enjoying the cashflow it provides.
The problem for those wanted to get started however, is that the entry levels are very high, or at least seems that way. Typically speaking, you need a deposit of anywhere from 10% upwards to get started. So without really researching to see how we can get around it, we all accept that it can’t be done. The fact is, when I did my research I found out that it can be done, LEGALLY. Having a high credit score helps to increase the methods available to you, but even if your credit is shot, like mine is [although recovering] you can STILL get started.
Buy A House With No Money
” How?” you ask!, With ‘Property Options’. This is an extremely low cost way to get involved in property, and it can all be looked at by lawyers who have an understanding of how this method can be utilised which puts both the investor, and the person whom you will be buying the property from, at ease. We can use this to purchase our own home, pick up investment property, or both! So, if you’ve always dreamed of owning your own home or getting started with the awesome investment opportunity that is property, grab a drink and lets get started…Here is the what I have learned so far on my journey:-
In terms of using this for investment purposes, you can negotiate a price that is below the true value, particularly if you have approached somebody who is in a situation that makes them desperate to wash their hands of the property. This locks in profit from day one. The Option gives you the right to buy it in the future at a fixed price without actually having the obligation to do so. You can ‘babysit’ the property and enjoy the cashflow without actually having to own it by helping the owner as you will be covering the monthly payments, allowing them to relax.
The benefit of this is that as a potential homeowner you can ‘test drive’ the property and pay slightly extra on top of the normal rental each month. If you have negotiated a period of 5 years before you take over the property properly the extra money you have been paying each month will act as your deposit.
A few circumstances which makes this ideal in both scenarios is where as a potential homeowner, you recognise that renting is dead money and would rather throw that money into something that you can eventually own. As an investor this can be ideal if you have a shot ‘credit rating’, lack the deposit money because you have purchased as much property as you can with what you have, or if you don’t have any money at all with which to invest.
By placing down a negotiated fee which acts as your right to buy that property in ‘x’ number of years, you can then take over the property from the seller, pay the mortgage and charge extra on top so that you can enjoy some profit. The seller receives the fee that acts as your right to buy it in a few years should you want to, and even if it doesn’t come to fruition at the end of the agreed period of time, the option fee you negotiated is non-refundable which means that they have got something out of it too and so both parties win!
Strategies to get started
One method is to target people who are fed up with a property they own for one reason or another. If they are in a position where they need to sell because they want to streamline their investment portfolio or are fed up with management fees for example, they may be open to negotiation on price. By explaining that you will provide them with a fee with acts as your right to purchase in, say, 5 years, you can then take over the payments and maintain them, whilst collecting the extra profit. The potential for using options is only limited to the imagination.
Where should I Advertise?
Utilising postcards in shop windows can also be cheap and very effective, allowing you to get responses from tired homeowners etc. Advertising in the local paper can also be effective if you run them for a long enough period of time. The same ca be done over the internet on advertising sites such as www.gumtree.com for example.
Give me a source!
An excellent source of information for detailed research on all things to do with property options is a website created by Mark Jackson. I keep myself updated by analysing the changes that are happening in the market with regards to this area and will be placing all of this knowledge into action. I have recently placed an advert in my local newspaper to pick up my first property on an option whilst I continue to build up my credit rating by paying down my debt. Before I did this I purchased relevant material which gave me info on how to do all of this properly. So there we have it guys, I hope this helps in learning how to pick up investment property on options.