Turning Profits In A Property Slump
Turning Profits In A Property Slump
Newspapers have done a great job conditioning everyone?s mind that the property market today is going downhill and is therefore a place to avoid. However, despite the doom and gloom that the media is quick to point out to the public, there are many new opportunities for property investors to make gains. As long as you play your cards right, you can be assured of winding up with the winners.
Lease options
A lease option is a normal AST lease combined with an ?option to buy? contract between the landlord and the tenant. The strategy is considered a very effective one in the current market. It is a simple agreement between landlord and tenant that gives the tenant the right to purchase the property from the landlord for a fixed price within a set period of time. In return for the benefit, the tenant pays out an upfront ?option? premium followed by above market rent for this privilege. The reason for this is that the landlord is now bound to selling the property to the tenant and nobody else for the period of the option agreement.
For the landlord, the lease option strategy offers numerous benefits:
* The landlord charges a premium rental for the tenant?s option to buy benefit. When the option is exercised, the landlord may opt to credit the above market rental fees against the purchase price.
* The landlord receives a non refundable option premium, which can be forfeited if the tenant reneges on his purchase plans.
* If the tenant misses a rent payment or the rent is not paid in full on time or if the tenant moves house, the option is automatically rendered null and void.
* In most cases, the landlord can trust the tenant to take care of the property who already sees it as his own home.
* The tenant will use his own financial resources to renovate, smarten up the property or take care of minor repairs as he will be hoping to eventually buy it from the landlord.
Buy off-plan or newly built properties
The current market is causing developers? share prices to hit rock bottom, making this a good time to get bargain basement prices on new-builds. But before making the purchase, make sure you scrutinize the local market thoroughly as there are possibilities for additional declines.
Find developers going through financial struggles. When it comes to developments, financing is often done in tiers and the subsequent stage becomes available only when a definite number of units are under offer. But successfully reaping the rewards of this strategy means that you should make sure that you purchase a carefully-selected property.
As with all investments, the main factor to take into account is the price you pay when buying the property. One effective way of getting the best price is to buy below market value. The process involves purchasing investment property from a motivated seller who?s often willing to sell below market value. The art of buying property for less than its true market value is a strategy that many investors have been relying on for a long time now because it?s profitable and has always been considered the most cost effective method of acquiring investment properties.
Newspapers have done a great job conditioning everyone?s mind that the property market today is going downhill and is therefore a place to avoid. However, despite the doom and gloom that the media is quick to point out to the public, there are many new opportunities for property investors to make gains. As long as you play your cards right, you can be assured of winding up with the winners.
Lease options
A lease option is a normal AST lease combined with an ?option to buy? contract between the landlord and the tenant. The strategy is considered a very effective one in the current market. It is a simple agreement between landlord and tenant that gives the tenant the right to purchase the property from the landlord for a fixed price within a set period of time. In return for the benefit, the tenant pays out an upfront ?option? premium followed by above market rent for this privilege. The reason for this is that the landlord is now bound to selling the property to the tenant and nobody else for the period of the option agreement.
For the landlord, the lease option strategy offers numerous benefits:
* The landlord charges a premium rental for the tenant?s option to buy benefit. When the option is exercised, the landlord may opt to credit the above market rental fees against the purchase price.
* The landlord receives a non refundable option premium, which can be forfeited if the tenant reneges on his purchase plans.
* If the tenant misses a rent payment or the rent is not paid in full on time or if the tenant moves house, the option is automatically rendered null and void.
* In most cases, the landlord can trust the tenant to take care of the property who already sees it as his own home.
* The tenant will use his own financial resources to renovate, smarten up the property or take care of minor repairs as he will be hoping to eventually buy it from the landlord.
Buy off-plan or newly built properties
The current market is causing developers? share prices to hit rock bottom, making this a good time to get bargain basement prices on new-builds. But before making the purchase, make sure you scrutinize the local market thoroughly as there are possibilities for additional declines.
Find developers going through financial struggles. When it comes to developments, financing is often done in tiers and the subsequent stage becomes available only when a definite number of units are under offer. But successfully reaping the rewards of this strategy means that you should make sure that you purchase a carefully-selected property.
As with all investments, the main factor to take into account is the price you pay when buying the property. One effective way of getting the best price is to buy below market value. The process involves purchasing investment property from a motivated seller who?s often willing to sell below market value. The art of buying property for less than its true market value is a strategy that many investors have been relying on for a long time now because it?s profitable and has always been considered the most cost effective method of acquiring investment properties.