Seminars – Controlling property without banks; Property Options and Lease Options

Intro

I have been to a lot of seminars about different ways of making money. I have also seen a lot of programs on the web.

I have written a Seminar Guide -A good seminar vs A scam & how to avoid getting ripped off on how the standard seminar works so you better evaluate whether a seminar you attend is good or dodgy (and whether you should sign up).

Starting with Property, in the next few articles I will explain some of the seminars and ways to make money.

Firstly I looked at property buying agencies, then overseas property focusing a lot on USA properties. Then I looked at cashflow positive properties - that might not cost anything to own after you get your tax refund. And Seminars – Renovation for Profit and Property Development - whether it is worth the time and effort to renovate or develop.

Now lets have a look at creating wealth via property when you might not even own it. Impossible? No – thanks to a thing called the option.

Controlling Property without bank loans

Property Options

 What is it: You arrange for an owner of a property to give you an option (i.e. the right to buy) the property for $x (maybe 10% above market price) and pay $1,000. Then improve the property value (e.g. getting development approval, council rezoned, etc.) and on-sell to a developer for profit.

Positives:

  1. Control rather than own – you control the property rather than owning it. So you don’t pay stamp duty or interest on a loan (as you are only the middleman).
  2. Can be quick profit (for property) – once you find a developer to purchase the option agreement – you have instant profit (no waiting for real estate agents to sell the property). Although obviously, the time to do the above steps can take from 3 months to 1+ years (so quick might not be the right word).

 

Negatives:

  1. Ripping off original owner? – You could be seen to be ripping off the original owner. This depends how honest you are about your dealings. If you are completely honest though – people might still want to deal with you because: A. Council Approvals take time and money to get (which they don’t have), B. You have contacts to get the sale happening, C. They would be happy with the price you offer them.
  2. Time required –It can take time to go to councils, architects, etc.
  3. 3.       Deals may fall through – You could work for weeks or months on a job to have it fall through, or make no money on the deal.

The seminar I saw was a mentoring program where the Guru paid the council application costs and helped arrange the sale and took a percentage of profits.  In those circumstances the Guru might be able to answer these negatives himself. Doing this on your own you would have the additional negatives.

  1. Knowledge required – Knowledge of council procedures, local areas
  2. Contacts required – Developer contacts to buy from you, owner contacts willing to sell to you, real estate agents?, etc.
  3. Expenses required – Paying the council costs out of your own pocket.
  4. Legal required – Paying lawyers for documents/time spent out of your own pocket.

 

Rating & Comments: For those who know what they are doing – this can be a great way to make profits.

For those who don’t – you could waste a lot of time and lose money. Again, you must be able to weigh up the risks and rewards adequately and have a strong team to help you with all aspects.

Similar to developing property – property options would require a lot of research to find the right sort of property, finding an owner to sell and then trying to increase the value of the property.

Your Work: High, Value of course: High, DIY – Low, Cost: Medium, Possible profit – High

Lease Options/Vendor Financing

What is it: Helping those who cannot afford loans ‘rent to buy’ a property from you that makes money each week.

Positives:

1.       Profit 3 ways – You usually receive a deposit (similar to a home deposit), a monthly payment (which would be above your mortgage payment) and a final payout figure by a certain date say 3 years (which would usually mean a capital gain).

2.       Help people in bad situations – You could help people who can’t get a loan, or want out of a property (e.g. divorced, etc.)

 

Negatives:

  1. Finding a property – It is very easy to find a negatively geared property –finding a property where the numbers could ‘stack up’ is harder.
  2. Finding a buyer – People are not used to lease options. Also they would probably pay more if buying a property under a lease option/rent to buy scheme – so people who could get a loan might not be interested.
  3. Finding a few deals – While each deal could be lucrative – you would need to find a few every year or 2 to make decent money. So it is similar to a business and although the money is ‘residual’ it doesn’t last forever (probably 2 or 3 years).
  4. Need legal knowledge – As you are dealing with owner and buyer/tenant – you could step on a few toes if there are any problems or legal issues.
  5. Banks – You are basically acting like a bank – whether they are completely happy with this.

 

Rating & Comments: This was a seminar that sounded so easy –until you realized that getting a ‘deal’ like this to work might take asking 200 people, advertising, etc.

Your Work: Med, Value of course: Med, DIY – Med, Cost: Low-Medium, Possible profit – Med

Posted in Making Money, Property

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