The Progressive Lease Option Blueprint Step No.1 Identify Landlord Seller & Property Find motivated seller or landlord who for some reason wants to move to a smaller house or wants to simply walk away from their liability. They cannot sell the property at a discount on the Open Market as they have too much debt or are in negative equity, landlords who wanted to sell their property but can t are forced to rent them out or by redeeming their mortgage it will cost them X amount and fees which they simply have not got. Use the ADS principle: 1. Address the need 2. be Different 3. keep it Simple You will need to tailor your advertisement to the type of seller you wish to attract. So for example, you are targeting a motivated Landlord: Ad title: Calling All Landlords We Want to Rent & Buy Your Property Description: How would you like to receive your rent guaranteed month after month with: -No late or missed payments so that you know what you are going to receive each month -At the full market rent with no deductions for Letting Agents Fees, so you get to keep more of the property income -Sleep easy at night not having to worry about having to fix the latest tenant problem or maintenance issue -Unlike some rental guarantee schemes there are no hidden charges, deductions or admin payments, you get to keep ALL the rent that is due. If this sounds appealing, then we should talk. We are a property company looking to rent houses for clients waiting on our books and would be very interested in leasing your property. We can also offer to purchase your property after an agreed term for its full market value. We may even consider properties that are in negative equity if it fits our tenants needs.
You can phone me now and have your questions answered to determine whether or not our rental guarantee scheme is a good solution to your house rental problem without committing any funds and without spending any money. Do you imagine that your Letting Agent with his commissions is probably making more money from your home than you are? So would you expect him to tell you how to get a guaranteed rent at full market value without any deductions if it means he won't get his monthly commission? You will have no rental voids Best wishes for quick and successful end to your house rental problems. CALL Dave: xxxxxxx PS We will consider any property, in any condition and may renovate or furnish your property at our expense to meet our tenant s needs. The Lease Option Agent/Investor will need to run through the Property Inspection Summary [which is a document that contains all of the necessary information regarding the state of rediness of the property for a lease option program]and then the important Option Agreement signed with the Motivated seller/landlord. If you find a motivated seller, the next step is to do you Due Diligence. Due Diligence-Will it work? You will need to investigate the vendor to ensure there are no hidden debts [as they do not always tell you the truth] and to look at the mortgage details. You will thus need to send a letter of authority to talk on behalf of the seller to the bank and ask what product is the mortgage on now? what is the current rate are there any arrears etc. If this fits within your buying criteria, and you are satisfied there are no arrears, second charges or anything that can affect your decision to go ahead, and you have constructed a win-win situation with the seller, giving them what they want and need, your next step is to get a consent to let form from the lender so you can lease/rent out the property. Once filled in and sent back, if they give you the green light, the seller should be able to go ahead. Parties involved: Lease Option agent/investor and Landlord Seller/Lender Step No.2 Property Advertised The Lease Options Agent/Investor will need to advertise the Motivated Sellers [MV s] / Landlord Seller [LS]property to find a Tenant Buyer [TB].
Ad title: No Mortgage Needed To Buy My House in xxxx Description: Great Chance to own a home, opportunity to buy a house in X area, no mortgage needed, move in now and pay us later Get a chance to own your home, rent to own my house no mortgage needed to buy my house. NO MORTGAGE NEEDED BUY MY HOUSE IN xxxxxxx. Rent goes towards buying Move In tomorrow No costs No hassle 125+p/w STOP PAYING DEAD RENT By using it towards buying YOUR home! First come, first served 3 BED Terraced property/unfurnished, downstairs bathroom, ideal first home, town and transport links nearby. CALL Dave xxxxx Parties involved: Lease Option agent/investor and Landlord Seller Step No.3 The Tenant Buyer Prospect Identified Once the property has been advertised for the proposed Lease Option sale, you will get a lot of enquiries. It is a good idea to log prospects email address and their postal address so you can keep in touch with them and send them a Free Special Report. [Remember Law #1: Reciprocation]. The main purpose of this is to build trust and to educate them [Law #5: Authority] hence even if the proposed TB fails to qualify, they can always refer other customers [ third step removed theory] they know who are want to own a property and become a customer at a later stage. If a TB is not identified at this stage, the Lease Options Agent/Investor will log the enquiry through the Buyer Contact Sheet and will give away the free report, and hopefully may agree to come back at a later stage to be a TB on another of your properties. You will need to pre-qualify your prospective TB s before you take them to visit your property. With the help of the Buyer Contact Sheet, you will be able to record all necessary information about your TB [such as potential deposit for the option fee, their current weekly rent, monthly income etc] after you have sifted through many prospects but before you take the chosen ones to view your property. If the Buyer Contact Sheet looks favourable then the TB will be vetted for visit. Parties involved: Lease Option agent/investor and Tenant Buyer Step No. 4 Property is Visited - Tenant Buyer Acceptance Lease Option Agent Motivated Landlord Approval
This stage involves the Lease options agent/investor to perform a credit report, tenant referencing [for the TB] and affordability check. The investor will as part of this process fill in the Home Ownership Application form, which will include the applicants details [TB], Employment details and any other necessary information which will form part of the contract for the sale agreement. If the TB is not approved at this stage, then go back to Step 3. If the TB is approved, the lease options agent/investor will send a Rent to Buy/Lease option confirmation letter, to confirm that his/her application has been successful. The next step is for the agent to organise a second meeting with the prospect/landlord Motivated Seller. Parties involved: Lease Option agent/investor Landlord Seller and Tenant Buyer Step No.5 Lease Option & Financial Terms Checklist This stage will involve going through the checklist before sending the paperwork to the solicitors. [note if you are doing a straightforward lease option with the original seller, or even in this case with a TB, you will need get the original vendor to sign an option, as your heads of terms on what you have agreed, i.e. you will take over their mortgage, aim to pay it off at some stage in the future, be responsible for the property from now on, and pay them 1 to make it legal and ask them to complete a receipt for it.] The Heads of Terms [HOT]is one if the contractual checklists that you and your TB have to sign. This will include: Purchase Price Tenancy/Option period Commencement Date Terms of Payments Year 1 Initial Option Fee, Monthly Instalment Option Fee, Rent Amount etc. The HOT will include a proviso that all option fees are non refundable where the TB does not exercise the option to buy. This will be signed by the Lease Options agent/investor and by the TB. The Lease options agent/investor will need to have three essential documents in place: 1] An option agreement 2] An irrevocable power of Attorney 3] a form RX1 signed by the MS.
The Lease Option Agent should ensure he registers an agreed or unilateral notice to protect his option with the MS and also to stop any further dealings with the property. The TB will also want to register a notice to protect is option. Next stage has the TB paid his Non-refundable Application fee? If not go back to Stage No 2. If the TB has paid his fee, then the Lease Option agent/investor will need to send instructions & the Lease Options contract to a Solicitor. Hence you as the investor will need to firstly complete a Lease Option instruction sheet to send to a solicitor who understands how these contracts work. The document will contain the terms agreed for the solicitor to work into a legal binding contract, so the parties can eventually exchange. Parties involved: Lease Option agent/investor Landlord Seller and Tenant Buyer Step No.6 Contract is exchanged Keys handed over & TB Moves In You may want to get your solicitor to motivate the TB to make provisions to give them some flexibility beyond any decoration work, under the Agreement of works to be Undertaken by the TB, and put in the contracts. You want the TB to treat the property as theirs and give them a home ownership mentality. Thus the document will record any monetary value of any agreed maintenance/improvement to the property to be forwarded to the solicitors to be accounted for at competition. The normal rules which apply are the landlord is responsible by law for certain repairs under the Landlord and Tenant Act 1985 Section 11, and should prescribe to most of the rules as you can during the option agreement. The Lease Option Agent will send the Standing Order Mandate. This will be sent after contracts have been exchanged and the TB has moved in. Thus the TB will pay the rent and the monthly instalment fee via standing order. Parties involved: Lease Option agent/investor Landlord Seller, Solicitor and Tenant Buyer Step No.7 Statements The Lease Option agent/investor will collect payments of rent, rent credits, Option fees through the Bacs system and maybe even hold them in trust in a separate account for the TB. Parties involved: Lease Option agent/investor, Solicitor and Tenant Buyer
Can the TB complete? When the time comes can the TB purchase the property so they can go ahead? Your TB must give you at least three months notice before the end of their option period that they are preparing to exercise their option. Get them to fill out the Exercise of Option Notice. Similarly, if they do not plan to exercise the option, make sure they give you enough time i.e. 2months prior so you can advertise for new TB s. If the TB has Mortgage funds and deposit drawable then they will be able to complete. If No then the option fee is forfeited and go back to Step No2 or Step No.3. The LO agent can even at this stage, grant another option for the TB within the next 2 years to purchase on the property. If Yes, The Tb is the proud owner of their new home and completion statements are sent. You will have cashed out you option. So the TB will have paid the whole sale price, you would have funds to pay off the contract with the original seller, and pocketing the difference from your TB. Parties involved: Lease Option agent/investor Landlord Seller, Solicitor and Tenant Buyer Other Exist Strategies We have talked about TB s but in reality this is only one exist strategy that can be used. Other strategies that can be utilised are: 1] Trade your motivated deal on a Forum for a Finder s Fee especially if they are out of your geographic location 2] Sell the lead to a FTB especially if there is a bit of equity 3] Sell the lead to a TB There are a lot more exist strategies and at least 51 different options that can be used. Get yourself booked on to our lease options course or email me at: suneep@progressivepropertyeducation.co.uk to find out more. Happy Investing