Purchase Lease Option Agreements: £1 is how much I just paid for a 26-bedroom hotel in Cambridgeshire! In a recent video, I give you a full tour. I talk to you about how much I paid for it and also the expected revenue from this hotel, which is around a million a year! I also talk to you about: how I'm going to run it; how I'm going to systemise it; how I negotiated it; and ultimately how you can do the same thing too. Watch the full video at the top of the page for all that and more!
The way I secured this property for only £1 is by using something called purchase lease option agreements. It allows you to take over a property now, and also have the option to buy it at a later date. This means you don’t need a lot of upfront capital to secure an investment property. In this article, I will give you a simple 3-step plan for securing your own purchase lease option agreements!
1. Purchase Lease Option Agreements: Understanding Lease Options
Purchase lease option agreements allow you to take control of a property, rent it out, and then have the option to buy the property at a later date. While you control the property, you pay ‘rent’ to the owner and take over the property's management.
But why would a property owner agree to this? There are many reasons, but one of the most common is negative equity! Negative equity is when the value of a property is below what is left on the mortgage. If a seller is in negative equity, selling their property at current market rates will not pay off the debt.
Purchase lease option agreements allow the owner to get rid of the property, with you covering the cost of the mortgage payments and maintenance. You then have an option to buy the property in a period of years. This is a great deal for them. It is also a great deal for you, if you can profitably rent the property out for more than you are paying them during the term of the option!
2. Purchase Lease Option Agreements: Finding A Deal
You can find sellers in negative equity on sites such as RightMove. Look for properties that haven’t sold in a long time. See what the asking price is, and what it was previously purchased for, using the tools on the site. If the property is being offered for less than it was bought for, that is a good sign that it might be in negative equity.
Estate agents are not often knowledgeable about purchase lease option agreements, and therefore you will need to find a way to speak directly to the owner. One way to find an address is to simply zoom in on the image on RightMove and find the door number. Another is to look at Google Street View and find the house. Once you have the full address, you can write to the owner directly.
3. Purchase Lease Option Agreements: Negotiating With The Owner
Explain to the property owner that you may be able to offer them the full asking price, but you will need some time for the market to recover. Ask them if they would be open to a ‘buy now, pay later’ arrangement, where you will take over the mortgage payments and maintenance in the meantime.
Depending on the deal, you may need to pay them an option fee for this, in other cases you may only have to pay a nominal amount (such as £1). Some deals may require only covering their mortgage payment each month, others may require paying a little more. This will depend on the property and your skills as a negotiator!
Once you have negotiated the deal, get a lawyer that specialises in lease options to represent the seller. Get a binding agreement drawn up and signed. Congratulations, you now have your first of many purchase lease option agreements!
Learn Purchase Lease Option Agreements And Other Property Strategies
If you want to learn purchase lease option agreements and other property strategies, you will need some training! Why not learn from a property expert? Join me at my next £1 training event!
On the course, you will learn how to:
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Become a property investor using other people’s money so that you can get started straight away
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Utilise the 5 different types of raised finance so that you know exactly what to offer and when
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Find the perfect properties for the BRR strategy
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Recycle your money so that you can ‘rinse and repeat’
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Build a power team you can trust, so that you can save time and money
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And much more!
Tickets are only £1, and you can get yours here. If you are ready to take action, I hope to see you very soon!
