The Property Unleashed Podcast

You Don't Always Need a Massive Deposit to Start Property Investing

• Mark Fitzgerald • Episode 342

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We explore whether you should buy property outright or use creative strategies like purchase lease options, rent-to-rent, and deal sourcing to build your portfolio. These alternative methods can help you overcome limiting beliefs about needing large deposits to get started in property investing.

• Traditional buying requires large deposits, stamp duty, and solicitor fees
• Creative strategies like purchase lease options require minimal upfront investment
• Purchase lease options work when sellers don't need immediate cash from their property
• Option fees can be as little as £1 or your first month's lease payment
• Properties can be acquired in 4-6 weeks versus 3-6 months with traditional buying
• Don't use creative strategies just because you can - ensure it's beneficial for both parties
• Building a toolkit of multiple strategies makes you a more effective property professional
• Strategies should match the specific circumstances of each property opportunity

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Speaker 1:

Should you buy property or should you get creative with your strategies? Let's find out, shall we? So welcome to today's episode. I'm going to talk to you about buying properties or using creative strategies to actually acquire properties, the pros, the cons on that and what you really want to be looking out for. So you've got some actionable steps that you can take away from this episode to really help you with this.

Speaker 1:

Now, predominantly most of the time, if somebody is looking to sell their property, they want to get top whack for it, they want as most money that they can get and they want it to go through as easily and as seamlessly as possible. So when you're trying to get a little bit more creative with homeowners or people looking to sell their properties, it can be a very, very difficult conversation to get into. Now, I'm not going to go in depth into those conversations. If you go through any of the podcasts and the training videos and everything on these channels, you will find how to speak to owners of property, how to speak to landlords and things like that as well. But here I really want you to think about how you can get invested and how you can do it very, very quickly, because there's a lot of people out there that have a lot of limiting beliefs when it comes to property investing. They know they need to invest, they want to invest, but they hold themselves back. Now one of the things is you could see a property, you could run the numbers on it, but you just cannot find an investor to help you buy that property. You cannot find the money that you actually need to acquire that property, even though you know you can help the owner of that property in their circumstances, which we always look to find out. You know at heart that deal is just not going to happen, and I see this all of the time. And this is something that we really work with and help our community in education to action my property investing community we help each and every person overcome those limiting beliefs and those hurdles each and every week, to be quite honest with you, and help to keep them on track.

Speaker 1:

If you're interested in that, click on Education to Action below and come and join us. It's as easy as a pound. You can jump in there and we'll help and support you and then you can see whether it's right for you or not. A lot of trainings in there as well, but most people think they need large deposits, but of course there's different creative strategies that you can use. Of course, you can use the likes of rent to rent. You can, of course, to get into property and start building up an income, use deal sourcing, or property trading as I like to call it, where you find good deals and you sell them on to investors. Or you can use property tools like purchase lease options, which is where you agree a price for the property. Now you agree a lease that you're going to pay each and every month the owner of the property and you have the option at the end to buy the property.

Speaker 1:

Now, if you can get out there and you can start using the likes of purchase lease options as a tool because it suits the circumstances, ie, for purchase lease options to really work, the seller doesn't need the money now and now there's two things that you can look for on that. One is the seller doesn't need the money now from the sale of the property. The other thing is the seller just needs a certain amount of money which you can use as your option fee, and it comes off the end price. So let's say it's a great deal. You can get to 20,000 pounds but you can't afford the other thousands of pounds for the deposit. It might be 75 grand you need to find, but you've only got 20 grand. But they need 15, 18,000 pounds to clear some debt, to pay for a wedding, to buy a holiday, to get a new car or something like that. You could have that as your lease fee. 18 grand is exactly what they need. They don't need any of the other money now. It could work very, very well. So if you start to see that you can help people like this, then you can use purchase lease options.

Speaker 1:

Purchase lease options mean that you don't need large deposits, you don't need to pay stamp duty, you don't need the big solicitor fees that are going through. You will have solicitor fees, which will be a good few thousand pounds, but they won't be dragging out over six months where you're trying to buy a property. Off them you can get hold of a property very, very quickly within four to six weeks. So a purchase lease option could cost you around three to four thousand pounds with solicitor fees and everything, and that's not accounting for the option fee. You can do the option fee a pound if you like.

Speaker 1:

I try and do an option fee for the first month's lease fee. So most of my lease fees range between two. Most of my lease fees range between £1,000 and £1,500, which is normally because I'm doing deals on properties that I'm using either for HMOs or I'm using them for serviced accommodation, because they're high cash flowing opportunities. But you need to have some money. But let's just face it, if I didn't have the money I would put it on a credit card. I'm sure I could find somebody in my inner circle, so to speak, to lend me a few thousand pounds on a good deal that I can pay them back. Of course you can secure these deals in less time. So you haven't got to wait three, four, five, six months to try and get this over the line. You don't need deposits and also the owner of the property has that sort of certainty that all of a sudden that hassle of trying to sell their property or even managing their property has been removed. So it's a great way to get out there and start building your property portfolio.

Speaker 1:

But I say, if you look at a property and let's just say for argument's sake, you're chatting to the owner and it's going really well, you think to yourself this could be a purchase lease option. You go and run the numbers and it's actually in your benefit to just buy the property, because they want too much for a monthly lease fee. They actually want too much for the house and the price and you can get it by no market value BMV. Then do the deal. Don't just do a purchase lease option or anything creative because you can Do it, because it actually suits your strategy and what you're trying to achieve. So it's got to be a win-win a win for them and a win for you as well. But don't just do creative strategies because you can. Now, if you've weighed it up and it's about, on balance the same, still do a lease option because you don't tie that money up means you can still go out there and buy more properties and things. But, like I say, don't just do it because you can do it. If it's actually going to be detrimental to your monthly fees or over the long run, you're actually going to be out of pocket through doing a lease option, it's not worth doing so. Lease options are a great tool to be using. Rent to rent is another great strategy to be using, but of course it's a busy strategy, it's a noisy strategy, but it's one that you can use to really build up your cash flow.

Speaker 1:

Now, as far as I'm concerned, here and now, we need to be the property professionals of our area. Okay, and what do I mean by that? Well, realistically, if you only know one strategy or one tool to use when you're going and speaking to homeowners, landlords, estate agents, letting agents or anything like that, then you're missing a trick. What we do now, or what I do with my students and my community, is I recommend that they go deep and they learn a couple of different strategies and tools to use, so that they're starting to build that toolkit in their mind. When they walk into certain situations, they could say this will be an excellent opportunity for me to source this property and sell it to my mate, because I know that's exactly what he wants.

Speaker 1:

Now, don't get me wrong If you're going to do that, you need to be compliant as a deal sourcer and everything, but if you just sell on a lead, then it's not a problem. You might look at it and say this would make a great rent to rent opportunity. You might look at it and say this has got a purchase lease option written all over it. This is going to be a great little deal. What I'm trying to say to you here is make sure that you're not just pigeonhole every deal into one sort of tool or strategy, because that's the only thing that you know. If it is the only thing that you know, then broaden your horizons and put yourself into a safe community where you can start to learn different strategies, and that's what we have at ETA. If you wanna learn deal sourcing, purchase these options, rent to rent. You wanna learn how to refurbish? You want to learn serviced accommodation HMOs we have all of those trainings in what we call a vault, and we have weekly coaching sessions and market updates each and every week to make sure our community is supported, that they're moving in the right direction.

Speaker 1:

This is a mission of ours right here, right now, to help as many property investors get out there, do a good job, help the people that they're trying to work with and continue the momentum of building up their own portfolios. So click on the link below. Educationtoactioncom is the place, come and have a little look and if you have any questions, reach out to us. But you can get out there. You can achieve what you want in property if you surround yourself with the right people with the right knowledge and with the right skills, and I hope that I'm bringing that to you through these different channels. Listen, if you do need any help or assistance, we have free tools and resources. We've got everything that you need to help you at a fraction of the cost. So do check us out and, if nothing else, download some of our free content, some of our free deal analyzers to help you make the choices and the best decisions when it comes to your property investing. I look forward to you joining me in the next episode very soon. Take care and bye for now.