Property Option Expert Blog

Tomatoes change with time. Green ones are toxic. Red ones are not. Timing is key. Imagine being able to harness that! You Joint Venture with Time to transform something toxic into something healthy. Property Options can empower you to do just that.

Options are agreements which give the holder freedom. Depending on the wording, the Owner grants you exclusive freedom to buy, use or sell the Property, or a combination of these freedoms. Options are powerful, simple to use and flexible. With an Option, a splash of creativity and a genuine interest in others “toxic” property can magically become healthy! Skilfully weaving such simple solutions brings wealth running.

Tomatoes need more than time to blush. Warmth, light and water are all essential. It’s the same with Options…

For your efforts to bear fruit experience shows the Vendor must like you. There must be warmth in the deal. Create it by listening, asking the right questions, and holding a genuine desire to help the person who needs what you have.  Only if you appreciate their motivation for selling, (the “Why”) will there be trust and warmth.  If the Seller is not sold on you, walk away.

Success with Options requires the light of honesty. Is the Vendor clear on whether you intend to buy, sell or hand the house back? Lenders have requirements, and though it may be easier to ignore them, rushing Options through, that will harm your reputation and profit. What about “Consent to Let” and buildings insurance? Is your paperwork suitable for the UK market?

The paperwork is the greenhouse glass. It should be transparent. Although it must be watertight to create the desired environment remember it is brittle, so avoid throwing stones.  Anything you structure must be good for both sides. Always be consistent and true to your word.

Selling a property you don’t own through a “Sandwich Option” may appeal, but what about the legal complications? Some of the more experienced Optioneers in the UK are working hard to find ways to better protect Tenant Buyers and comply with Lender criteria before getting overly excited about this.

Ants on a canvas don’t enjoy its beauty; ensure you avoid that mistake. Step back. Get the whole picture. Options can create cash fast, but a big-picture vision grows a solid reputation bringing true satisfaction and lasting wealth.

Ideas drown in words, and saying too much rarely gets the deal to fruition. Beware of swamping the Vendor you want to help! They need just enough information to feel comfortable and informed. Watering little and often brings the best results. UK vendors might be described as sophisticated and possibly enjoy a different approach to that used in other English speaking countries.

Since 2006 I have helped more than 80 people with various forms of Option Agreements in England, the UK way.  Here are some examples:

Buying:

Darlington DL3 May 2007

The Situation: A family needed to sell their empty large end-terrace; the mortgage was crippling them.  £93,600 would clear the debt and inject capital into their restaurant business.
The Want: £110,000 in 4 months
The Need: A quick sale of £95,000 and instant relief from mortgage payments
The Solution: A 4 month Purchase Option (£93,600) with mortgage payments (£475) coming off the balance at completion.
Commentary: This Option was assignable. The investor I sold it to made 3 mortgage payments before buying.  He converted it to two flats and achieved an end value of £200,000.

Darlington DL3 June 2008

The Situation: Two brothers own an empty modern 2 bed house with no debt; 6 months marketing at £85,000 found no buyer.  Unwilling to become landlords and struggling to pay the mortgage on their new home, they needed a quick fix.
The Want: Clear the mortgage on the new home
The Need: Monthly money to cover the mortgage on their new home
The Solution: A 48 month Instalment Purchase Option (£67,000) with permission to let
Commentary: I pay them £280 pcm and let the house for £650 pcm. I will buy within the term and hold. There are many houses out there mortgage free, which seem to the owner to be a liability!

Selling

Newton Aycliffe, DL5 August 2008

Tired of problem tenants, Allan responded to my line add.  His 3 bed semi was perfectly located. It was important for him I didn’t negotiate on the price.  The property was mortgage free.  We quickly forged a 48 month Instalment Purchase Option at £82,500 and agreed my £250 monthly payment would be credited to the purchase price.

The Financials: I get rent of £500 pcm. The family improved the property hugely and can buy within 36 months for £110,000. £2,000 was the deposit; work’s credit of £10,000; £50 a month instalment.  If they buy in 36 months they will pay £96,200. I will owe Allan £73,500.  My total profit will be £36,620.

The family are ecstatic in their dream home.  Allan has peace of mind and a monthly income.  I made some new friends…and an amazing return for a couple of hours work.

Success with Options eludes some. To craft solutions focus on the person, not the property.  Understand their wants but address their needs, show warmth, be fair and honest and water judiciously.  Remember, options are primarily tools for helping people, and secondly instruments for profit creation.  That way, even the greenest tomato will blush.