In a recent YouTube video, I shared exactly step-by-step what I would do if I wanted to get on the property ladder with only £1,000. The way I would do this is by buying a property and paying for it later. Most people don’t know that you can do this because it isn’t widely taught in society. Society tells you to buy a sofa and pay for it later; go on holiday and pay for it later; go to University and pay for it later; but when it comes to property, you need to save up and wait.
The way you can buy property now and pay for it later is by using a purchase lease option. This is where you find a seller who wants to get rid of their property but can’t sell it for an amount large enough to cover their mortgage. You offer to buy the property a few years down the line when the market has had a chance to recover, however you will take on the property now and cover the mortgage payments. Watch the full video (above) to see exactly how it is done! In this article, I will cover 3 steps you need to take to find a purchase lease option agreement deal.
1. Finding a property
The first step is to find a property that fits the bill. This means a house where the seller cannot sell the property for the price they bought it for. In such cases, the seller would often be unable to pay off the mortgage if the property was to be sold for less. This is known as negative equity.
To find these properties, you will need to search for properties that have been on the market for a very long time. You can do this on property portals like RightMove by sorting by ‘oldest listed’. You should search in areas where the market is currently quite cheap such as Newcastle, Stoke on Trent, County Durum, etc. When you find a property that might work, check how much the property last sold for to see if it is equal or less than the current asking price.
2. Booking a viewing
Now that you have found the property, you need to book a viewing. This isn’t the same as booking a normal viewing because you need to speak to the seller, not an estate agent. Most estate agents will not understand a purchase lease option agreement and you will lose any chance of a deal.
There are some online agencies, like PurpleBricks, where the seller is the one that shows you around the property. If the property is listed with one of these, you can simply make a booking. If the property is listed with a regular agent, you will need to get the seller's details direct. You can do this by going on the Land Registry and paying £3 to get a copy of the title deeds, which will contain the owners details. Write to the owner and book an appointment directly with them.
3. Assessing a deal
Finally, you will need to assess the deal. If you are going to take on the property on a purchase lease option, you need to know you will be able to pay down the mortgage during the lifetime of the lease. You will need to assess the likely rental demand in the area. You can use Rightmove, SpareRoom and local letting agents to help you make this assessment. If the numbers check out, you may have found a deal. Talk to the seller and make your offer!