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Introduction
The year 2009 saw the concept of lease options explode onto the UK residential property scene.
Although property options have existed in the UK for hundreds of years, a combination of the lack of
mortgage finance, the UK property market bottoming-out and avid property investors determined to
take advantage of both of these factors saw investors turn to more and more creative strategies for
investing in residential property.
In a property market that has already fallen by an average of 20%-25% from its peak in July 2007,
property investors are eager to cash in on this Buy Opportunity Of A Lifetime - property prices are so
low it is unlikely that we will see property prices this low again for the foreseeable future. However,
the one hurdle investors do face is mortgage finance which is still difficult to obtain – especially for
full-time property investors unable to prove their income.
What this book will show you is how to take the banks out of the equation so that you can still buy
properties regardless of whether the banks will lend to you or not. You will learn how to use the
power of options to gain control of property, how to generate cashflow while you are in control of
the property, and how to make tens or even hundreds of thousands of pounds whether you buy,
keep, or sell properties.
This book will give you 5 Advanced Option PowerPlays that you can use right now in this market to
‘buy’ property. We will look at the situation that each deal is good for as well as providing an
analysis on the valuation, negotiation, the legal considerations and the numerical construction of
each deal.
This book is perfect for the current market of 2010. Rather than falling prey to the seemingly erratic
nature of bank decision-making, each PowerPlay empowers you to continue to invest in property
regardless of the prevailing mortgage conditions. Using these PowerPlays there is simply no excuse
for anyone not to ‘buy’ properties.
What Is An Option?
The legal definition is that an option gives you the right, but not the obligation to buy an asset at a
set price within a specific period of time. In other words: you can buy it if you want to, but you don’t
have to if you don’t want to.
Over the last 50 years UK property prices have doubled in value every 7-10 years. Let’s say that you
have control of a £250,000 property today. Now let’s assume the mortgage is £230,000 and you had
an option to buy it at £230,000 at any time over the next 10 years. By then the property should have
doubled in price, i.e. £500k. Let’s just say you simply rent out the property at a profit of £250 per
month. This is how this examples plays out:-
Upfront Profit: £0
X 10 years
= £30,000
= £270,000
This is a huge £300,000 profit for simply controlling a property with the option to buy later. This is
an example of what can be achieved using the power of options. Now do this once a month for 12
months and what you have is one highly effective strategy
The phrase ‘lease options’ is very sexy in the UK property market right now. However, it is not the
only way to capitalise on property options. Whereas some gurus may have you believe that lease
options have only recently come to the UK from Australia and the USA, the reality is that property
options have been used in the UK for hundreds of years. The objective behind this book is to show
you that there are far more than just 1 or 2 methods that options can be applied to. At this point it
should be noted that the authors broadly expect the UK property market to remain at its current
level for the next 3 years plus – so at least until 2013. The 5 Lease Options PowerPlays presented in
this book should help you create good cashflow and massive cash profits during this time and
beyond.
This manual is the culmination of years of investing, advising on property deals, legal research, and
investment analysis not just from the authors’ own experience but also of the thousands of property
investors that they have trained and represented between them. We present you with 5 PowerPlays
here that you can use to immediate effect secure in the knowledge that other investors don’t have
these PowerPlays at their disposal. This is a shame as you have already seen how easy it is to create
tens of thousands, hundreds of thousands, or – in some cases over a million pounds’ worth of profit
out of thin air.
You will learn how to give your dead deals the kiss of life, how to create quick cash in a falling
market, how to do No Money Down deals, how to solve your sellers’ problems in a creative way,
how to turn unworkable deals into moneyspinners using these 5 innovative Property Option
PowerPlays.
We present you in this short book with PowerPlays that relate to residential properties,
developments, land and commercial property – which should unleash your creative energies and
transform the way you do your property deals. Each PowerPlay comes complete with a Heads Of
Terms which is a legal document. Use this Heads Of Terms as a template for the initial agreement
that you would sign with a seller eager for you to take their property off their hands. You will simply
get the seller to complete the Heads Of Terms along similar lines to the ones presented here and
return to your solicitor to secure the deal.
Each Heads Of Terms has been put together by MS-Law Solicitors who are the leading legal firm in
the UK for residential option agreements. For the last 18 months MS-Law have been at the forefront
of this revolution changing the face of lease options in the UK both in terms of their legal standing,
but also in terms of their creative flair.
This book is part of a much larger reference manual which demonstrates 51 Property Option
PowerPlays – a 500 page 2 Volume Set delivered to your doorstep - which lays out all the latest
groundbreaking methods that you can use today to create jaw-dropping property deals. This
Reference Manual includes many secret PowerPlays that the authors have never taught property
investors or clients before. This is not only the UK’s most advanced reference on options, but the
most advanced reference on options that has ever been written in the English language.
Please use the QuickRef overleaf to match the situation you are currently facing with your seller and
therefore which PowerPlay or PowerPlays you can refer to for guidance on how you would go about
structuring your specific option deal. The 5 PowerPlays contained here will give you many of the
basic situations that you will find yourself in. For more advanced strategies where you’re looking to
maximise the opportunity, you should refer to the 51 Property Options PowerPlays where you will
get guidance on how to combine the PowerPlays and how to tailor them to your deal.
We have given you within this book a flavour of the strategies in each of the different sectors:
residential, land, development & commercial. In 51 Property Option PowerPlays - the 500 page 2-
Volume Reference Manual - we also include how to structure whole property portfolios using
options, and how to combine the strategies.
The 2 –Volume Set is only available on limited release so make sure we have your details here:-
www.LeaseOptionPowerPlays.com.
Quick Reference
Primary PowerPlays:
Describe the 1 or 2 PowerPlays that are best matched for the situation described.
Secondary PowerPlays:
These are other PowerPlays that could come into play instead, if the situation is similar but not
necessarily an identical match to the situation described.
Quick Reference
What Is The Situation? You Have A Vendor Who Is Moving Abroad And Cannot Sell Their Property
Primary PowerPlays:
The Managed Option Contract
Secondary PowerPlays:
The Classic Moc Multiplier
The iMoc
The Option Flip
sMOC
The Buy Out Option
The Ugly Duckling
Divide & Conquer Option
The Sweat Equity Option
The Vendor Double Dip Option
The Cashback Option
The Subsidised Option
The Mission Impossible Option
The Yin Yang Option
The Instalment Contract
The Guaranteed Rental Scheme
The Contract Management Option
The Corporate Option
No Money Down Option
The Trust Deed Option
Traditional Vendor Finance
Earnout Strategy
The Option Lead Flip
The Assignable MOC
The Equity Split Option
The Sandwich Option
The LHA Strategy
The Holiday Option
The iMoc sMOC The Buy Out Option The Option Flip
Quick Reference
What Is The Situation? Your Vendor Is In Negative Equity And Cannot Sell Their Property
Primary PowerPlays:
The Cashback Option
The Sweat Equity Option
The Subsidised Option
The Mission Impossible Option
Secondary PowerPlays:
The Managed Option Contract
The Classic Moc Multiplier
The Slice & Dice
Divide & Conquer Option
The Option Swap
The iMoc
The Instalment Contract
The Guaranteed Rental Scheme
The Contract Management Option
sMOC
The Option Lead Flip
The Assignable MOC
The Equity Split Option
The Sandwich Option
The LHA Strategy
The iMoc sMOC The Sandwich Option The Sweat Equity Option
Quick Reference
What Is The Situation? The Property Is In Negative Equity & Negative Cashflow And Cannot Sell Their
Property
Primary PowerPlays:
The Mission Impossible Option
The Cashback Option
The Subsidised Option
Secondary PowerPlays:
The Managed Option Contract
The Classic Moc Multiplier
The Slice & Dice
Divide & Conquer Option
The Option Swap
The iMoc
The Instalment Contract
The Contract Management Option
The Corporate Option
sMOC
The Option Lead Flip
The Assignable MOC
The Equity Split Option
The LHA Strategy
The iMoc sMOC The Option Swap The Classic Moc Multiplier
Quick Reference
What Is The Situation? Your Vendor Wants Nothing Less Than The Full Market Value for Their Property
Primary PowerPlays:
The Managed Option Contract
The Classic Moc Multiplier
Secondary PowerPlays:
The Option Flip
The Slice & Dice
Divide & Conquer Option
The Vendor Double Dip Option
The Option Swap
The iMoc
The Instalment Contract
The Guaranteed Rental Scheme
The Contract Management Option
The Corporate Option
Earnout Strategy
The Option Lead Flip
The Assignable MOC
The Equity Split Option
The Sandwich Option
The LHA Strategy
The Holiday Option
Quick Reference
What Is The Situation? You Want To Buy A Large Property, But It Is Not Possible To Let As An HMO
Primary PowerPlays:
The LHA Strategy
The Contract Management Option
Secondary PowerPlays:
The Slice & Dice
The iMoc
The Instalment Contract
The Corporate Option
sMOC
The Sandwich Option
The Holiday Option
Quick Reference
What Is The Situation? You've Seen A Property That Requires A Full Refurbishment Before It Can Be Let
Primary PowerPlays:
The Ugly Duckling
The Sweat Equity Option
The Builder's Bum Option
Secondary PowerPlays:
The Slice & Dice
Divide & Conquer Option
The Yin Yang Option
The Option Swap
The iMoc
The Instalment Contract
The Option Lead Flip
The Assignable MOC
The Equity Split Option
The Sandwich Option
Quick Reference
What Is The Situation? The Mortgage Is In Arrears And The Bank Is About To Repossess The Property
Primary PowerPlays:
The Option Flip
sMOC
The iMoc
Secondary PowerPlays:
The Managed Option Contract
The Classic Moc Multiplier
The Option Swap
The iMoc
The Contract Management Option
The Corporate Option
sMOC
The Option Lead Flip
The Assignable MOC
The Equity Split Option
The Sandwich Option
The LHA Strategy
The Holiday Option
Quick Reference
What Is The Situation? Your Property Won't Generate Enough Rent As A Single Family Let
Primary PowerPlays:
The Classic Moc Multiplier
The LHA Strategy
The Sandwich Option
Secondary PowerPlays:
The Option Flip
The Sweat Equity Option
The Subsidised Option
The Cashback Option
The Mission Impossible Option
The Yin Yang Option
The Option Swap
The iMoc
The Contract Management Option
The Corporate Option
sMOC
The Option Lead Flip
The Assignable MOC
The Equity Split Option
The Sandwich Option
Quick Reference
Primary PowerPlays:
The Sale Option
The Sandwich Option
The Option Flip
Secondary PowerPlays:
The Sweat Equity Option
The Option Swap
The Instalment Contract
The Contract Management Option
The Option Lead Flip
The Assignable MOC
The Equity Split Option
The LHA Strategy
Quick Reference
What Is The Situation? The Value Of Your Property Is Too High For A Standard Buy To Let
Primary PowerPlays:
The Option Flip
The Yin Yang Option
Secondary PowerPlays:
The Option Swap
The Instalment Contract
The S&D Keep Strategy
The Pension Plan Strategy
The Storage Millionaire
The Option Swap The Yin Yang Option The Option Flip
Quick Reference
What Is The Situation? You've Found Some Land Which Has Development Potential
Primary PowerPlays:
The Quick Land Value Creator
Secondary PowerPlays:
The Development Option
The JV Profit Builder
Build To Keep Option
The Storage Millionaire
The Car Park Option
The Quick Land Value Creator The Development Option The Car Park Option
Quick Reference
What Is The Situation? Your Vendor Has A Shop He/She Wants To Rent Out
Primary PowerPlays:
The Commercial Lease Option
Secondary PowerPlays:
The Commercial Cashflow Lease Option
The Commercial Sublease Multiplier
The Commercial Option Flip
The Simple Switch Option
Quick Reference
What Is The Situation? You've Found A Large Site Which Is Currently Empty And The Landowner
Receives No Income From It.
Primary PowerPlays:
The Storage Millionaire
The Car Park Option
Secondary PowerPlays:
The Quick Land Value Creator
The Development Option
The JV Profit Builder
Build To Keep Option
The Car Park Option The Quick Land Value Creator The JV Profit Builder Build To Keep Option
Quick Reference
What Is The Situation? Your Vendor Wants To Give You A Long-Term Lease But Without The Option To
Buy
Primary PowerPlays:
The Guaranteed Rental Scheme
Secondary PowerPlays:
Quick Reference
What Is The Situation? You Have A Retiring Landlord Who Wants To Sell His Portfolio.
Primary PowerPlays:
The Portfolio Split Option
The Instant Portfolio Stacker
Secondary PowerPlays:
Repackaged Portfolios
Quick Reference
What Is The Situation? Your Vendor Wants To Sell The Property Now. He Does Not Want To Give An
Option.
Primary PowerPlays:
No Money Down Option
Secondary PowerPlays:
The Trust Deed Option
Quick Reference
What Is The Situation? You Come Across A Development Of Apartments In A City Centre That No-One
Wants. What Do You Do?
Primary PowerPlays:
The Virtual Hotel Option
Secondary PowerPlays:
The Sandwich Option
No Money Down Option
The Equity Split Option
The Portfolio Split Option
Repackaged Portfolios
Quick Reference
What Is The Situation? You Have An Option That's Due To Expire & You Can't Get A Mortgage Right Now.
What Do You Do?
Primary PowerPlays:
Supermum Option
Secondary PowerPlays:
The Trust Deed Option
No Money Down Option
Quick Reference
What Is The Situation? You Have A Piece Of Land That Is Refused Planning Permission To Develop Into
Flats
Primary PowerPlays:
The Storage Millionaire
Secondary PowerPlays:
The Car Park Option
Quick Reference
Primary PowerPlays:
The Sweat Equity Option
Secondary PowerPlays:
The Option Flip
The Ugly Duckling
The Yin Yang Option
The Sale Option
The Option Swap
The Option Swap The Yin Yang Option The Sweat Equity Option
Quick Reference
What Is The Situation? Your Seller Is Only Willing To Allow You A Short Option Contract (i.e. 6-9 months)
Primary PowerPlays:
The Option Flip
Secondary PowerPlays:
The Ugly Duckling
The Commercial Option Flip
The Builder's Bum Option
The Option Lead Flip
Quick Reference
What Is The Situation? Your Seller Wants Some Money Upfront Right Now
Primary PowerPlays:
The Vendor Double Dip Option
Secondary PowerPlays:
The Managed Option Contract
The Sale Option
The Instalment Contract
Your sellers have already bought other houses, but can no longer afford to make mortgage
payments on both houses. It’s just way too much for them. They’re extremely frustrated and are
considering handing the keys back to the bank!
This scenario calls for you – the investor – to take over the mortgage payments on this property and
agree to buy the house from the seller at a fixed price any time within the next 10 years.
During that time the market may have doubled. So in 10 years’ time you’d have the option to buy
this house for 50% of its market value THEN. In the meantime you could rent out the house at a
profit as the monthly mortgage payments are much lower than the rent achievable on this property.
Other investors would walk away from this opportunity, leaving you to pick up great properties in
great areas that have fallen 20%-25% in value from their peak, rent out at a profit & buy the
property on the cheap in 10 years’ time.
Leaflet advertising
Estate agents
Tired Landlords
As with any problem there is also an opportunity and it may be possible to get properties on
options with the intent of just getting cash flow each month so long as you can get some
insurance, even if it is very high or has a very high excess.
11. Use Upmystreet and other property portals to check if property area is ok.
Remember property investing is all about location, location, location. This is very important
to the long term value of the property, and these property portals allow you to check local
information about the area such as the crime rate, unemployment rate and many other
factors.
12. Carry out searches
We would recommend you always carry out searches on the property, and this is vital if you
are either paying a large option fee or carrying out a lot of refurbishment works on the
property.
13. Do a background check on property
It is worth doing background checks on the property itself. It may be cheap because
something has happened at the property, maybe someone was killed in the property or it’s
haunted. This may have an adverse affect on the value of the property.
14. Is the property mortgageable?
Make sure the property is of traditional construction and therefore mortgageable. Many
properties have been built using non-standard construction. Although in the past it would
have been possible to obtain mortgages, you would struggle to find a lender for these now.
15. Are there any unsecured loans?
Although strictly this is not a problem on the deal, if you do not look at all the finances of
your seller, you may find that they become bankrupt and this would have some impact on
your option. Many of the PowerPlays here mitigate this but it would be better to get the
seller onto a debt plan with a debt management company that fully understands the process
of options for example Express Money Solutions.
negotiating an amount lower than the redemption figures as the seller will not be able to sell the
house unless they have other money that they can use to pay off some of the loans.
SECRET TIP: Convince the seller that they should pay at least the next mortgage payment while the
legal process goes through. That should give you enough time to put a tenant into the property.
Buildings Insurance
You will want to add your name to the seller’s building insurance and also ensure that the buildings
insurance covers you letting the property out to the kinds of tenants that you want to rent to.
SECRET TIP: Get the property advertised on Gumtree or Vivastreet in order to find a good tenant.
Price of Option £1
Upfront Profit 0
Cashflow During Option Term £550 rent - £300 mortgage = £250 pcm
X 10 years = £30,000
As can be seen from the example above, a profit of £250 per calendar month is made and the total
cost of money put into the deal was £1. The total profit here is £140k, which is not bad for a
property that all the other investors walked away from.
The Managed Option Contract forms the basis to lease options in the UK and as you have seen, this
PowerPlay alone would earn you over £100,000 in profit.
Be sure to use the QuickRef to look at how to use this strategy with some of the other PowerPlays.
Although the 5 PowerPlays presented here are magic, imagine what you could do with all 51
PowerPlays at your disposal in terms of the deals you could structure! How much cash would they
net you? What combinations of PowerPlays could you thread together to become a truly maverick
property investor.
Imagine how much more successful you’ll be when you buy the full 51 Property Option PowerPlays
– the 500 page 2 Volume Advanced Technical Manual for the full set of nuances and flavours that
you can implement to extract the maximum cash out of your property deals.
The 2 –Volume Set is only available on limited release so make sure we have your details here:-
www.LeaseOptionPowerPlays.com.
Strategy 2
The Managed Option Contract
HEADS OF TERMS
Grant of an Option to Investor by Owner
Amount payable to Owner’s Mortgage Lender per month: whatever the monthly mortgage
payments are - currently £300.00 pcm
Address: ___________________________________________________
Address: ___________________________________________________
Address: ___________________________________________________
Address: ___________________________________________________
Terms of Payment
Any other period payment to be made to Owner £ every
week/month/year
Any extra term: right to extend option for a further 12 months, extension fee =
£1,000.00
_____________________________________ _____________________________________
Date:_________________ Date:________________
When you see the property, the first thing you see is that nobody could live there. Although the
seller had correctly described the property as ‘needing a lick of paint’, you see, critically that there is
no kitchen or bathroom. Although the house may not be in any need of structural work, the fact
that there is no kitchen or bathroom means the property is unmortgageable and that explains why it
hasn’t sold for so long.
What this does is to severely restrict the number of buyers able to take on this challenge. If the
seller were to put the property on the market with an estate agent, the estate agent would sell it
through one of their investor friends. The lack of bank finance limits the sale ability of this property
to only investors with cash, investors able to borrow ‘hard money’, or residential buyers with cash –
who also like doing up properties.
However, the best idea here is for you to take a short option to buy the property with the right to
carry out works during the option period. The seller will pay the mortgage in the meantime (if there
is one) and you will do the property up and then sell it. You might have to offer to pay the mortgage
payments but if this is a probate property, the payments may be minimal. The beauty about
transforming this ugly duckling is that you will be able to control the property with very little of your
own money and then sell it at a much higher price due to the increased value of the property.
What we love about these types of properties is that you can add value to the sellers’ lives and also
add value to the property for maximum profit.
Note that in order to achieve the best price you will have to use an aggressive marketing campaign,
and stage the property for sale – which is different to just renting the property out. These are the
two beauties of this PowerPlay:-
1. Usually you would not be able to buy the property and sell it within 6 months as the Council
of Mortgage Lenders (CML) stipulate that the previous owner must have owned the
property for 6 months. Using an option agreement, the previous owner would have still
owned it for 6 months, as it would be the original vendor selling directly to the buyer, under
your instructions, giving you no problems when selling the property on. The 6 months rule
doesn’t apply if the sellers have inherited the property.
2. You will sell the property at a much higher price having never owned it.
You can make a lot of cash in a short amount of time using this PowerPlay. In addition, your seller
will be delighted as you have taken their problem away from them!
Leaflet advertising
Court repossession lists
Estate agents
Internet advertising etc…
Tired Landlords
As with any problem there is also an opportunity and it may be possible to get properties on
options with the intent of just getting cash flow each month so long as you can get some
insurance, even if it is very high or has a very high excess.
11. Use Upmystreet and other property portals to check if property area is ok.
Remember property investing is all about location, location, location. This is very important
to the long term value of the property, and these property portals allow you to check local
information about the area such as the crime rate, unemployment rate and many other
factors.
12. Carry out searches
We would recommend you always carry out searches on the property, and this is vital if you
are either paying a large option fee or carrying out a lot of refurbishment works on the
property.
13. Do a background check on property
It is worth doing background checks on the property itself. It may be cheap because
something has happened at the property, maybe someone was killed in the property or it’s
haunted. This may have an adverse affect on the value of the property.
14. Is the property mortgageable?
Make sure the property is of traditional construction and therefore mortgageable. Many
properties have been built using non-standard construction. Although in the past it would
have been possible to obtain mortgages, you would struggle to find a lender for these now.
SECRET TIP: In addition to carrying out the refurbishment, do stage the house for sale as this
dramatically increases the wow-factor when sellers come to look around the house. You want
potential buyers to feel they are already living there, so put out towels in the bathroom, toilet paper
in the toilet, set places at the kitchen table as if they are already living there. Make sure the front of
the house is inviting people in!
Buildings Insurance
You should take out new policy insurance on this property to protect yourself as you will spend
£10,000 doing it up.
SECRET TIP: Offer other incentives to your buyer. Offer to pay their solicitor’s fees and their removal
costs as these incentives do not need to be reported to the bank and they are mortgage-friendly.
SECRET TIP: When selling, offer the estate agent an incentive so that if they manage to sell for the
amount you want and completion happens within 2 months, then they will get an extra £500, and if
completion happens after, they will just receive their normal selling commission.
SECRET TIP: Get the builder to finance the refurb in exchange for a higher fee when the property
sells. Doing things this way you will have virtually no upfront fees.
Price Of Option £1
Upfront: £0
During: £0
= £50,000
As can be seen from the example above, a profit of £50,000 is made before tax and the total cost of
money put into the deal was £1 (plus the £10,000 for the refurb). This doesn’t take into account the
capital appreciation of the property.
This is a perfect example of being able to earn a good yearly income from just 1 deal within 6
months. You could put 20% of the profit in to fund your marketing budget for a whole year netting
lots more jaw-dropping deals and locking in lots more profit.
Be sure to use the QuickRef to look at how to use this strategy with some of the other PowerPlays.
Although the 5 PowerPlays presented here are magic, imagine what you could do with all 51
PowerPlays at your disposal in terms of the deals you could structure! How much cash would they
net you? What combinations of PowerPlays could you thread together to become a truly maverick
property investor.
Imagine how much more successful you’d be when you purchase the full 51 Lease Option
PowerPlays – the 500 page 2 Volume Advanced Technical Manual. For the full set of nuances and
flavours that you can implement to extract the maximum cash out of your property deals.
The 2 –Volume Set is only available on limited release so make sure we have your details here:-
www.LeaseOptionPowerPlays.com.
Strategy 3
The Ugly Duckling
HEADS OF TERMS
Grant of an Option to Investor by Owner
Address: ___________________________________________________
Address: ___________________________________________________
Address: ___________________________________________________
Address: ___________________________________________________
Terms of Payment
Any other period payment to be made to Owner £ every
week/month/year
Any extra term: right to extend option for a further 6 months, extension fee =
£1,000.00
_____________________________________ _____________________________________
Date:_________________ Date:________________
The seller knows that the land to the side is attractive to an investor. The key thing here is that
many developers or investors may not be willing to build right now as we are not at that point in the
property cycle that features a rapidly rising market. However, there is still the opportunity to use an
option to make a lot of cash in a very short space of time.
Using the Divide & Conquer Option gives you control over the whole plot of land and this strategy is
another classic PowerPlay.
Having made preliminary enquiries with the planning department to ensure that they wouldn’t
necessarily rule out giving planning permission, you will take the property on an option. The seller
will stay in the house and continue to pay the mortgage – this will give you 3 months to get outline
planning permission to build the two 3-bed semis in the back garden.
On gaining planning permission, you will then split the title with the original house on one title and
the land with the planning permission on the other.
You will then sell the house to a normal buyer and sell the land with planning permission to a
developer.
Leaflet advertising
Estate agents
5 Lease Option PowerPlays The Divide & Conquer PowerPlay Page 44 of 68
5 Lease Option PowerPlays
There are a few things that you will need to look out for. Of course you will need to check values of
3-bed semi detached houses that are similar to the ones that you intend to get outline planning
permission for. This defines what this plot is worth to a potential developer.
You will need to look out for the building line for the road around the corner. You will need to
ensure that the water mains do not cross the plot for which you are intending to get planning
permission.
Let’s assume the property is worth £200,000. The seller has been trying to sell for some time
unsuccessfully and so you manage to secure an option agreement on this property for £175,000.
Having already made preliminary enquiries with the planning department to ensure that they
wouldn’t necessarily rule out giving planning permission, you decide to take on the option. The
seller would stay in the house and continue to pay the mortgage and you would spend 3 months
getting outline planning permission to build two 3-bed semis each worth £150,000.
Each plot of land for each house with planning permission would then be worth £50,000 (each). You
would sell the existing house to anybody for just £150,000 – a ‘loss’ of £25,000. But since you would
make £100,000 for the plots of land with planning permission, overall you would make a profit of
£75,000.
As with any problem there is also an opportunity and it may be possible to get properties on
options with the intent of just getting cash flow each month so long as you can get some
insurance, even if it is very high or has a very high excess.
11. Use Upmystreet and other property portals to check if property area is ok.
Remember property investing is all about location, location, location. This is very important
to the long term value of the property, and these property portals allow you to check local
information about the area such as the crime rate, unemployment rate and many other
factors.
12. Carry out searches
We would recommend you always carry out searches on the property, and this is vital if you
are either paying a large option fee or carrying out a lot of refurbishment works on the
property.
13. Do a background check on property
It is worth doing background checks on the property itself. It may be cheap because
something has happened at the property, maybe someone was killed in the property or it’s
haunted. This may have an adverse affect on the value of the property.
Mortgage £150,000
Price Of Option £1
Upfront Profit: £0
Subtotal: -£25,000
Plus:
Sale Of Plot 1: £ 50,000
Sale Of Plot 2: £ 50,000
Subtotal: £100,000
This is another example of a PowerPlay where you stand to make £75,000 within 6 months of having
done actually very little at all!
Be sure to use the QuickRef to look at how to use this strategy with some of the other PowerPlays.
Although the 5 PowerPlays presented here are magic, imagine what you could do with all 51
PowerPlays at your disposal in terms of the deals you could structure! How much cash would they
net you? What combinations of PowerPlays could you thread together to become a truly maverick
property investor.
Imagine how much more successful you’ll be when you purchase the full 51 Lease Option
PowerPlays – the 500 page 2 Volume Advanced Technical Manual for the full set of nuances and
flavours that you can implement to extract the maximum cash out of your property deals.
The 2 –Volume Set is only available on limited release so make sure we have your details here:-
www.LeaseOptionPowerPlays.com.
Strategy 6
Divide & Conquer PowerPlay
HEADS OF TERMS
Grant of an Option to Investor by Owner
Address: ___________________________________________________
Address: ___________________________________________________
Address: ___________________________________________________
Address: ___________________________________________________
Terms of Payment
Any other period payment to be made to Owner £ every
week/month/year
Any extra term: right to extend option for a further 6 months, extension fee =
£1,000.00
_____________________________________ _____________________________________
Date:_________________ Date:________________
As you are looking at the house you are trying to work out how to get the ‘highest and best use’ out
of this house. You are aware that somehow it is possible to split – but are not so enthused about the
prospect of turning it into a House Of Multiple Occupancy (HMO). You are also aware, based on LHA
rents, that the LHA PowerPlay is not worthwhile.
What you could do with this type of property is to split it into a number of flats. The combined value
of these flats would be much more than the value of the house on its own.
So what you will do here is to get an option on the house, get planning permission to convert the
house into flats, convert the house into flats, create a freehold for the house and leaseholds for each
flat, and then sell each flat on. However, there is a twist in the way that you do things here that
turns this idea into the Pension Plan PowerPlay. You will then keep with the freehold which you will
keep on a long term basis.
The way this strategy works is as follows. You would follow these steps :-
3. Do the conversion
Get a builder to do the conversion and convert into apartments.
4. Find buyers
Find buyers and sell the properties on.
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Leaflets advertising
Court repossession lists
Estate agents
Internet advertising etc…
Please note that here you will need to value the property as a house first of all to satisfy yourself as
to the equity (if any) left in the house. Then you will need to check the market value of flats and
apartments in the local area. Only then will you be able to ascertain whether the conversion will
stack up (and whether you will be able to borrow the money to carry out the conversion).
For example in this area a double-fronted Victorian 4 bed semi-detached house is worth £200,000.
You manage to source the property at 185,000 on an option agreement – so you have the right to
buy this property for £185,000. You see that you can convert the house into four 1-bedroom flats at
a cost of £10,000 per flat. So the total conversion will cost £40,000. The flats are then worth
£100,000 each.
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5 Lease Option PowerPlays
As with any problem there is also an opportunity and it may be possible to get properties on
options with the intent of just getting cash flow each month so long as you can get some
insurance, even if it is very high or has a very high excess.
11. Use Upmystreet and other property portals to check if property area is ok.
Remember property investing is all about location, location, location. This is very important
to the long term value of the property, and these property portals allow you to check local
information about the area such as the crime rate, unemployment rate and many other
factors.
12. Carry out searches
We would recommend you always carry out searches on the property, and this is vital if you
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5 Lease Option PowerPlays
are either paying a large option fee or carrying out a lot of refurbishment works on the
property.
13. Do a background check on property
It is worth doing background checks on the property itself. It may be cheap because
something has happened at the property, maybe someone was killed in the property or it’s
haunted. This may have an adverse affect on the value of the property.
14. Is the property mortgageable?
Make sure the property is of traditional construction and therefore mortgageable. Many
properties have been built using non-standard construction. Although in the past it would
have been possible to obtain mortgages, you would struggle to find a lender for these now.
15. Are there any unsecured loans?
Although strictly this is not a problem on the deal, if you do not look at all the finances of
your seller, you may find that they become bankrupt and this would have some impact on
your option. Many of the PowerPlays here mitigate this but it would be better to get the
seller onto a debt plan with a debt management company that fully understands the process
of options for example Express Money Solutions.
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5 Lease Option PowerPlays
You should use some of the basic incentives to help sell the flats:-
- Give a 5% discount
- Pay any stamp duty if applicable
- Carpet property
- Removal costs
- Part exchange with their existing house .
Price Of Option £1
Upfront: £0
Plans = £3.000
Total = £43,000
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5 Lease Option PowerPlays
So here, for simply spotting an opportunity and executing it well, you’ve been able to create
£180,000 of profit within 12 months. Here you may have had to project manage the conversions,
but by anybody’s calculations £180,000 profit on a single residential property worth £200,000 that
you’ve never owned is an amazing profit.
Be sure to use the QuickRef to look at how to use this strategy with some of the other PowerPlays.
Although the 5 PowerPlays presented here are magic, imagine what you could do with all 51
PowerPlays at your disposal in terms of the deals you could structure! How much cash would they
net you? What combinations of PowerPlays could you thread together to become a truly maverick
property investor.
Imagine how much more successful you’ll be when you purchase the full 51 Lease Option
PowerPlays – the 500 page 2 Volume Advanced Technical Manual for the full set of nuances and
flavours that you can implement to extract the maximum cash out of your property deals.
The 2 –Volume Set is only available on limited release so make sure we have your details here:-
www.LeaseOptionPowerPlays.com.
5 Lease Option PowerPlays The Slice & Dice Pension Plan PowerPlay Page 57 of 68
5 Lease Option PowerPlays
Strategy 45
The Slice & Dice Pension Plan
HEADS OF TERMS
Grant of an Option to Investor by Owner
Amount payable to Owner’s Mortgage Lender per month: whatever the monthly mortgage
payments are:currently £400.00 pcm
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Address: ___________________________________________________
Address: ___________________________________________________
Address: ___________________________________________________
Address: ___________________________________________________
Terms of Payment
Any other period payment to be made to Owner £ every
week/month/year
Any extra term: right to extend option for a further 6 months, extension fee =
£1,000.00
_____________________________________ _____________________________________
Date:_________________ Date:________________
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Currently there are lots of sites around the country where owners have got planning permission to
build apartments, but because of the downturn in the market, developers are not interested in
building right now.
This is just part of the natural cyclical trend of property. What you want to do is to control this piece
of land with an option to buy at today’s prices and then sell or build on it in a few years’ time when
the market has recovered.
So here’s the big question: How do you hold this land for those intervening years while you wait for
the property market to recover? There are a number of PowerPlays you can use for example the
carparking strategy but one of our favourites is The Storage Millionaire.
The essence of The Storage Millionaire is that you get good income from the land for the next 3 or 4
years and then when the market recovers you either build or sell on the land to a developer. So you
get cash flow now and you hopefully get potentially massive profits in the future too.
The site you are looking for would generally be large, ½ an acre or more but it could be smaller. It
would generally be a vacant land site although it could also be a derelict building with a large car
park.
Firstly, you would get an option over the land for the next 5-7 years minimum at close to today’s
market value. You would also get a lease over the property for the same period of time, which will
allow you to rent the property from the owner. You should be able to get this for very little relative
to the size of that land as it currently of no real use to anyone else.
You will then get planning permission to use the site for self storage containers (these are shipping
containers that you see on the back of trucks everywhere). The reason for this is that they are cheap
to buy or rent and when you sell on the site in the future you can sell the containers on very easily.
Words of caution: be aware that planning permission only lasts for 5 years currently and so you may
need to think about selling or extending the planning on the site for the development within that
time frame.
Secondly make sure there is good demand for storage in the area where you are thinking of using
this strategy. If the land is hidden away in some back street, in a residential part of town, you may
not be able to get planning permission and there may also not be any demand for storage facilities.
This is a typical landbanking PowerPlay. You will babysit the land until the market conditions change
allowing you to do what you really want. But you will also earn good profit in the meantime.
Look for land with planning permission that has been approved or refused in the last year and see
what is happening with those sites. If nothing then it may be worth contacting the owners directly
as the market may not suit that particular development right now.
1. The uplift in the price of that land when the market recovers and you can sell it on to a
developer
2. The cashflow you make from renting out the containers.
The uplift would be based on the Gross Development Value of the development that can be put on
the site. That is the total resale value of all the properties that would be built. For example if there
were ten apartments and each could be sold for 100,000 then the GDV would be £1 million. And the
land in normal time would be worth about between 30% and 40% of that value i.e. between
£300,000 and £400,000.
Rent receivable
50 storage containers @ 200pcm £10,000 £10,000
Less
Hire of containers £2000
Lease of land £650
£2,650 (£2,650)
There will also be costs involved in insurance and other overhead expenses .
Use the checklist in the “check out the deal section” this is very important in this strategy especially
the following sections.
and any restrictions on the property. Otherwise you will not be able to exercise the option
since you will not be able to remove all the loans from the title register.
9. Seller not bankrupt?
Check that the seller is not bankrupt. This can be done by running a bankruptcy search. Also
check that he is not about to be declared bankrupt as this would complicate your option. It is
often advisable to get a Debt Management Company that specialises in and understands
lease options for example Express Money Solutions to put your client into a debt plan of
some sort.
10. Property in flood zone?
Make sure that the property is not in a flood zone as otherwise you will find it difficult to get
insurance and to get a mortgage if you decide to buy later on.
As with any problem there is also an opportunity and it may be possible to get properties on
options with the intent of just getting cash flow each month so long as you can get some
insurance, even if it is very high or has a very high excess.
11. Use Upmystreet and other property portals to check if property area is ok.
Remember property investing is all about location, location, location. This is very important
to the long term value of the property, and these property portals allow you to check local
information about the area such as the crime rate, unemployment rate and many other
factors.
12. Carry out searches
We would recommend you always carry out searches on the property, and this is vital if you
are either paying a large option fee or carrying out a lot of refurbishment works on the
property.
13. Do a background check on property
It is worth doing background checks on the property itself. It may be cheap because
something has happened at the property, maybe someone was killed in the property or it’s
haunted. This may have an adverse affect on the value of the property.
14. Is the property mortgageable?
Make sure the property is of traditional construction and therefore mortgageable. Many
properties have been built using non-standard construction. Although in the past it would
have been possible to obtain mortgages, you would struggle to find a lender for these now.
15. Are there any unsecured loans?
Although strictly this is not a problem on the deal, if you do not look at all the finances of
your seller, you may find that they become bankrupt and this would have some impact on
your option. Many of the PowerPlays here mitigate this but it would be better to get the
seller onto a debt plan with a debt management company that fully understands the process
of options for example Express Money Solutions.
SECRET TIP: You could agree the rent to be based on a percentage of what you receive. For instance
you will pay 20% of the Gross total rental income.
Developers
To find developers it is easy to get a list of all development companies that work in the area. This
information can be obtained from any large local library. You would then write to the developer with
a description of your site and an explanation as to why they should buy it .
SECRET TIP: If there is another storage facility nearby, look to see if you can rent a billboard nearby
and advertise your storage facility there.
Price Of Option £1
Upfront: £1
Less:
£650 Lease
20 x £150,000 = £3 Million
Less:
£921,000
This is an excellent cashflow strategy. The added value you give this deal comes from the Change Of
Use to house storage containers – an area where there is good demand.
This is an excellent PowerPlay for making use of land which you may want to develop later. This is a
great landbanking strategy. You profit from the land while you wait for the market to improve.
SECRET TIP: There is often a shortage in many cities of specialist storage facilities, for example cold
storage facilities. You could look at this as a possibility.
SECRET TIP: Many companies require storage facilities in the run up to Christmas since they will
often bring loads of products in containers ready for the Christmas sales, so be sure to price these
short term rentals higher.
Be sure to use the QuickRef to look at how to use this strategy with some of the other PowerPlays.
Although the 5 PowerPlays presented here are magic, imagine what you could do with all 51
PowerPlays at your disposal in terms of the deals you could structure! How much cash would they
net you? What combinations of PowerPlays could you thread together to become a truly maverick
property investor.
Imagine how much more successful you’d be when you purchase the full 51 Lease Option
PowerPlays – the 500 page 2 Volume Advanced Technical Manual. For the full set of nuances and
flavours that you can implement to extract the maximum cash out of your property deals.
The 2 –Volume Set is only available on limited release so make sure we have your details here:-
www.LeaseOptionPowerPlays.com.
Strategy 26
The Storage Millionaire
HEADS OF TERMS
Grant of an Option to Investor by Owner
Address: ___________________________________________________
Address: ___________________________________________________
Address: ___________________________________________________
Address: ___________________________________________________
Terms of Payment
Any other period payment to be made to Owner £ every
week/month/year
Any extra term: right to extend option for a further 60 months, extension fee =
£1,000.00
_____________________________________ _____________________________________
Date:_________________ Date:________________