Our first PIM 0n 27 September 2012 in Bristol, was such an exciting event!
Expert speaker Peter Hogan was both entertaining and interesting, talking in depth about his 2 favourite strategies in the current market.
Peter has used many different strategies over the years, but today he concentrates just on these two. Both require very limited capital investment, so they are ideal anyone who wants to get into property, but has limited resources available.
As Donald Trump said, “Control Everything, Own Nothing”.
Lease options offer you the opportunity to do just that.
The concept is very simple – you simply take over someone’s mortgage and rent the property out. You have an option to buy the property at an agreed point in the future, usually between 7 and 20 years, at a price which is fixed now. You therefore obtain immediate cash flow with the opportunity for a capital sum in the future.
One of the very attractive features of this strategy is that you have no exposure to falling property prices – you do not have to purchase the property, at the end of the fixed period if you do not want to, you simply have the option to do so. Perfect for anyone who is not confident about the medium term outlook for house prices.
One of the other advantages is that you can set up a lease option very fast indeed. It’s quite common for deals to be agreed with 3 days and everything completed and the property rented out within just 2 weeks.
It’s also a great way to build a portfolio very fast. In fact Peter himself acquired 48 properties in 7 months during 2011, using this strategy. Obviously, it would be simply impossible to buy that number of properties, in such a short time frame.
As you can imagine, there are some detailed requirements to set the deal up properly, with the right structure and legal documentation, including management agreements and powers of attorney, but essentially this is a very easy strategy to use – and Peter has no idea why more people aren’t using it!
Peter is also using adverse possession as a longer term property investment strategy. This is a method of legally acquiring property which has been abandoned, using official Land Registry procedures.
Well, we’ve all seen abandoned properties, both in our cities and in the countryside – and they provide a great opportunity to improve the local environment, as well as to acquire property virtually for free.
It does seem amazing, but people move away, perhaps even to another country – and companies can also forget they own properties when their business develops and staff move on. It is essential of course to make sure the property really is abandoned and the owners simply cannot be traced, so you do need to put in some time and effort to try and find out the owner.
If the property has been abandoned, you can then take it over, provided you follow some simple procedures. You can then refurbish as necessary and rent the property out.
You do then have to wait quite a long time – 10-12 years – before you can apply to the Land Registry, using their adverse possession procedures, after which you will own the property outright and even if the original owner reappears, the property is still yours.
If the original owner reappears within the 10-12 years, they will be able to claim the property back from you, which is why you do want to be very sure the property is genuinely abandoned – but at least you have had the income meanwhile – and this is a great long term strategy to run alongside lease options – which is exactly why Peter is using it in this way.
We also heard from Mortgage broker Matt Kelynack who updated us on the latest lending criteria and availability – and from Natasha, one of our latest mentoring students, who updated us on her amazing progress.
After just 7 weeks she has completed her first 2 rent to rent deals, with 2 more about to complete. The first one makes £1500 per month alone! She’s definitely going to be a property star of the future and is very appreciative of all Del’s support and knowledge.
Of course there was plenty of opportunity for networking too and all the guests were busy chatting and making contacts.
We’re looking forward to seeing everyone at the next PIM on 25 October in Bristol, when our guest speaker will be Jim Haliburton, the HMO Daddy.
To your Property Success
Del Brown, Property Options