Real Estate Information | Let us create a 3d Digital eBook for you! DigyCat.com |
|
Property Investment Strategy: Securing Properties with Little or No Deposit
Property Investing often requires creative strategies to make it successful. Professional property investors often use the option contract as a tool to develop some useful investment strategies. Here are some of the ways the option contract can be used to secure property for profit with little or no outlay. Option contracts have long been used by Developers to secure potential development opportunities. They allow the developer to exclusively hold the property while they have the local authority approve the development application. An options contract can give the developer the right but not the obligation to purchase a property. They pay an option fee to the vendor in exchange for this right. When the option contract expires the developer either, buys the property and proceeds with the development, or, passes the property back to the vendor. Yes, it costs the developer a small fee to secure the opportunity (often 1% or more of the total asking price), but it is a small amount if the development cannot proceed or is not profitable. This way the developer limits their risk. Property investors can secure a property in the similar way that developers do, like the example above, using a variation of the option contract. This type of option contract allows the investor to secure a property with a negotiated deposit and assign it to another purchaser if required without having to purchase the property first. A property is secured by an option contract with a term of 2-6 months, sometimes more. The investor can then add value to the property before reselling it for an increased price with little or no closing costs. Here are a few ways they are used to secure property and create profit; 1. An older property is secured with an option contract. The agreement also provides for access by the investor to renovate. Once the renovation is completed the property is marketed at a higher price, before the option contract expires. The investor then assigns the contract to the new purchaser and the sale then becomes a contract between the original vendor and the new purchaser. 2. An option contract is used to secure an off-the-plan property, with a 12-18 month completion date. In this situation the vendor agrees to allow the investor the option to buy or on-sell the property. The investor may purchase a number of apartments at a reduced price, when it is nearing completion, the property is sold at the original or a higher price. Providing the market has moved up during the time to completion a reasonable profit is made. Additionally, the fixtures and fittings can be upgraded to provide even greater value. 3. An option contract can be used as a method of providing 100% finance. The property is secured on a long term option contract, 12 months or more for a set price. Rising values in a fast growing real estate market ensure that by the time the option contract expires the value of the property has gone up sufficiently to ensure that there is enough equity in the property to cover the deposit. An option contract can provide some attractive investment strategies for property investors wishing to maximize their returns. In all cases the option contract provides security for the vendor and opportunity for the property investor. See an Option Contract sample option contract (an alternative to the lease/purchase arrangement used in the USA) on the Property Investors Association of Australia web site. This article may be reproduced in its entirety provided the resource box below is included as part of the article. John Moore is a Prosperity Coach specializing in Property and Business coaching. He has helped many people create wealth in their lives and is President of the Property Investors Association of Australia Inc. http://www.piaa.asn.au/ an organisation dedicated to providing news, information and resources to Property Investors.
MORE RESOURCES: |
RELATED ARTICLES
Lake Havasu Real Estate Lake Havasu real estate is a hot commodity. With surrounding attractions such as the London Bridge, English Village, Mohave Desert, and Lake Havasu, it's no wonder that the place has become a popular place to live. Maximizing Curb Appeal and First Impressions to Sell your Home We all know that a home or property of any kind, in order to sell faster and at a higher price, should have what is known as curb appeal. Frequently, it is not the expensive things that make a difference. No More Estate Agent Fees Follow a few simple guidelines, and marketing your own home can be easy. And it will save you thousands. Real Estate Investing - Free Vacations While Searching for Real Estate Acquisitions Real estate investing professionals look for all possible tax deductions because of the generous profits derived from real estate investing.For example, real estate investors are concerned whether the sale of their real estate is subject to capital gains taxation or qualifies as ordinary income. Selling Your Home? A Warning About Attachments Before you list you home for sale, determine what you don't want to leave behind.Our friends sold their home for full price and moved out a few days before closing. Don't Just be a Real Estate Agent, be a Professional! Buyer Broker Agreement? What's that? Most agents don't ask their potential buyers to sign anything. It is too?well?you know?uncomfortable. Prepare Your Property Like A Pro And Boost Profits The housing market is hot, and you've decided to list your home. But what, if any, improvements should you tackle before selling? Should you just leave it all to the new homeowner?There are two ways to look at pre-sale home improvements. Home Equity Loans - Beware of Appraisal Fraud A new report by the independent Demos group has revealed what may not be a surprise to many people - corruption is rampant in the home appraisal industry. The bust in the dot-com market of some five years ago has left would-be lenders with a surplus of cash to lend. Make Money As A Slumlord Be a slumlord? Okay, I got your attention, now the truth. I really don't recommend that anyone endanger their renters with unsafe housing. What's Your Style? A Guide to America's Most Common Home Styles Styles of houses vary across the country. From the New England Cape Cod to the Victorians of San Francisco, the choices are almost endless. Are You Profiting From O.P.P.? Are you profiting from O.P. Why Mobile Homes? There are mobile homes for sale, for much less than stick-built houses, in most areas of the country. Despite persistent predjudice against them, and sometimes the people living in them, mobile homes are the cheap housing choice of millions. The Art & Science of Property Valuation -- Automated Valuation Models It is no secret that sellers want to sell high and buyers want to buy low. But they often arrive at the negotiating table with very different ideas on price. How To Give Yourself A $20,000/Year Raise Without Asking Your Boss Why without asking your boss? Two reasons, one, he or she will most likely say no; and second, he or she will probably have you committed for asking. So what do you do. Sellers, Are You Having A Hard Time Selling Your Home? Sue and Chuck DeFiore have the perfect solution for you - Lease Purchasing your home!What is Lease Purchasing?A Lease Purchase is a process that combines a basic rental lease with an agreement to purchase, or with an option to purchase the property. The Buyer (or Lease-Purchaser) pays to the seller a monthly payment that usually approximates a rental amount or a typical mortgage payment on the home. Four Reasons To Offer Seller Financing An example of seller financing: Years ago I bought a rental property, and nine months later sold it for 15% more, without fixing or improving a thing. The easy terms are what sold it. Donald Trump on Real Estate I love what Trump says about the business of real estate.I am a big believer in setting up business systems for all my clients. FSBO - How to Prepare Your House to Sell Did you hear that? Prices of houses in Phoenix have been jumping 5% each month for 2005 according to market experts! Some even predict that the price of housing could jump an additional 10% for the upcoming year. The shortage of houses for sales and the still relatively low interest prices are causing the price of homes not just here in Phoenix but nationwide to escalate. Real Estate Investing - The First House Purchase Real estate investing usually begins with the purchase of a house, rather than raw land or commercial property. The purchase of a relatively inexpensive house for rental or fix-up purpose is usually lower risk than any other type of real estate investment. Renting Versus Buying A Home Renters are often in a quandary as to whether it makes sense to continue renting or buy a home. Buying a home makes more sense, particularly when taking a long-term view. |
List4Sale Domain Is For Sale - $10,000 For Enquiries eMail Us © www.List4Sale.biz 2012 |