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Unlike normal
buy to let properties where UK residents have to put down 25% –
30% deposits, foreign investors usually have to put down even more
- these types of deals are very different as you only have to pay
agent fees and legal fees to get the deal, so no deposit is required.
You are agreeing the price of the property now with the vendor and
not having to complete until the end of the term (usually anywhere
between 2 – 10 years). This gives you the chance to make a
substantial equity / capital appreciation over these years. So lets
say for example a property is £100,000 today and in five years
it has increased to £140,000 then you would have made £40,000
on the property deal.
During this time you take over the existing mortgage payments on
the property, this way you are not having to get a mortgage or apply
for credit yourself, so anyone can get these deals no matter what
your credit rating is or if you are a foreign investor and cannot
get credit. It is becoming harder and harder to get mortgages, so
this is the perfect way of obtaining properties, rather than pay
25% – 30% on one property you could get yourself an instant
portfolio of properties this way. And you can buy unlimited amounts
of these types of property deals.
You would normally put a tenant in the property to pay you a rental
income that you would use to pay the existing mortgage and leave
you with a positive cash flow each month.
The great thing about these deals is that you can buy or sell them
on at anytime during the term, there are a number of strategies
for this;
You can sell the option onto another property investor who wants
to take the deal from you
You can hold the property for the term then when it is nearing the
end and has build up large equity sell it on the open market for
a premium
You can put in a rent to buy purchaser who wants to live in the
property but is unable to get a mortgage at the current time due
to the economic climate, this will give them time to improve their
credit rating so that they can eventually get a mortgage on the
property. So for example lets say the property is £100,000
then you could offer it to your rent to buy client for say £130,000
at the end of the term. You can also charge them a fee upfront to
get the property. So you would never complete on the property this
way yourself as your rent to buy purchaser would be completing on
it.
So there are many income streams from these types of deals, you
have income from the rental, the capital appreciation and the fee.
In my opinion these types of deals are far better than buy to let
properties and far less risky and even more fruitful.
For more info
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