| |
| |
|
Real Estate Information |
|
|
|
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:
Real-Estate - Google News |
|
|
|
RELATED ARTICLES
Mancos Real Estate Real estate: availability and costIn 2000, the median home value for a single-family residence in Mancos was estimated at $94,200 as compared to the U.S. Not Everyone is Buying or Selling, Some are Doing Both As if one real estate transaction is not hectic enough? many of us end up needing to sell one place in order to move up to the next? this is the "real estate catch 22". Do we buy first?? Do we sell first?? If we are fortunate, these events occur at the same time, but that is not always the case. Mortgage Broker Training: How to Secure Loyalty From Realtors So you've just returned to your office after delivering an Oscar worthy presentation to a real estate agent. They're impressed and ready to do business with you. Create a Sizzling Home Sales Flyer Did you know that the sales flyer is the most important tool in selling a house?Even if your home is listed with an agent, check the flyer that your agent has created, to see if you can jazz it up. Examine it closely, to make sure that all your amenities are listed. Successful Property Letting And Management Successful Property Letting And Management is not something that just happens, it is something that has to be worked at, and planned professionally. When a landlord or an agent has a problem let, it is almost certainly to do with the suitability of the selected tenant. How Long Your Mortgage Runs Determines How Much You Pay The first thing most of us think about when the time comes to take out a mortgage on a new home is the interest rate.That's both perfectly natural and very sensible. Real Estate Bankruptcy Although real estate bankruptcy cases no longer dominate the bankruptcy courts' dockets as they did in the early nineties, but they continue to be filed with great frequency in UK. At its essence, the real estate bankruptcy is a two party dispute between mortgagee and mortgagor. Home Equity - Don't Spend It on Risky Investments The housing market has exploded in the last five years, and homeowners are finding that the equity in their homes is greater than it has ever been. The equity in a home is the difference between the market value of the home and the amount still owed on it. How to Choose the Proper Entity for Your Business First, let me state that I'm not an attorney and the rest of this article is just based on my experiences so I'd advise you to contact John Hyre at www.realestatetaxlaw. 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. Unravelling The Real Estate Buying Process in Canada If you're a foreign national thinking about investing in the real estate market in Canada here's a run down of the typical buying process you should expect to encounter together with a general explanation of mortgages available to assist with the purchase.First things first though, you have to find your ideal property of course!But let's assume you've done that with the help of a good estate agent and you're ready to move forward with an offer. Prepare Your Rental Property for Occupancy Among your many responsibilities as a landlord, the law provides for a warranty of implied habitability. This means that the dwelling must be considered habitable and any known problems must be fixed before you allow a tenant to take occupancy. How to Use Color Psychology to Prepare Your Home for a Top-Dollar Sale (Part 1) You've decided to prepare your home for sale. Whether you sell by owner or hire a real estate agent, you want to get as much money as possible without spending your profits. The Many Benefits Of Lease Purchasing Lease Purchasing affords wonderful benefits and opportunities to sellers, buyers, investors and those who would like to operate a home-based business. Lease Purchasing allows you to control property without ownership which has benefits for all. Selling Houses with Curb Appeal and Design Psychology Curb appeal is the most important challenge you'll face when selling your home. You must make home shoppers feel like getting out of their car to see what's behind the front door. Cheap Homes For Sale In Great Towns Good Homes Under $50,000? My wife Ana and I found cheap homes for sale all over the country during a seven-week drive, and we even bought one along the way. It was in a pretty little town in the mountains of western Montana, and it cost us $17,500. An Estate Planning Primer An estate plan can be designed by clients and their professional advisors to achieve the client's personal and financial objectives. Or, it can be an arrangement imposed upon survivors by state intestate succession laws if someone dies with¬out a valid, up-to-date will. Home Inspection Checklist - Home Inspectors Although architectural details, wall and floor coverings, modern conveniences and many other factors are important in the buying decision, the focus of this inspection is on the structural/mechanical/electrical condition of the property.The inspection is designed to give the real estate agent or prospective purchaser a system to detect some of the readily accessible major flaws or deficiencies in the significant components and systems of a home. How to Sell Your Home Without a Real Estate Agent Considering the rapid rise in home prices over the past several years, home sellers are taking a hard look at the commission they have to pay to a real estate brokerage to market and sell their home. Real estate commissions vary across the country; they average in the four to seven percent range. RESPA: The Real Estate Settlement Procedures Act The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute, first passed in 1974. One of its purposes is to help consumers become better shoppers for settlement services.
|
 Home  Contact
|
| Real Estate Information © 2006 |
