Are you a first home buyer?

Would you like to buy a private residence for just a pound?

Would you like to buy your dream house and make money in real estate at the same time?

If you answered yes, then you must read this article. By reading this article, you can buy a house for a pound, and live in the house of your dreams. Here is how you can buy a house without investing any of your own cash and create positive cash flow.

Now I know others may be skeptical about this whole idea of buying a house for a pound but I tell you, it is really possible.

It is made possible through a property finance model known as a “lease option”. Also known as “rent to own” or “lease to buy” scheme, lease options  are hassle-free and straightforward. This is because home buyers have wider opportunities to completely control the property despite of their difficulty in acquiring traditional bank finance. Thus, you can still buy a property through a lease option even if you don’t have a good credit or sufficient deposit funds.

With a lease option, you can lease or rent the property from an individual. Then an agreement with this individual will be set-up in order for you to purchase the property when the lease term ends. Therefore, you can purchase the property more than you ever thought you could afford. You might be wondering why. But this is because you agreed on a rent with the seller and so the payments are notably lesser than the payments you would be paying to a bank.

So, here are the necessary steps to help you purchase the house of your dreams for a pound:

1. Self-assessment. Ask yourself why you prefer to purchase a property through a lease option. If you have a good credit score and sufficient deposit funds, than a traditional bank loan should be preferred over a lease option.

• If you come across a troubled seller that owes close to what his property is worth than the possibility of purchasing the property for a smaller amount as low as one pound. But remember the legal fees, of course, which is around 600 pounds. If not, you can pay the seller with 3-5% of the market value of the property. You also need to ask yourself on how option fees you can afford to pay so you can obtain the right to buy the property from the seller. You must take note that there is a significant difference between the houses you can buy at 3-5% of the market value and the houses you purchase for as low as one pound. In case you decide to lay down 3-5% of the market value, you must confer with the seller that such option payment should be attributed to your purchase. But remember also that whenever you decide not to purchase the property when the lease term ends, you are going to lose this option fee.

• Ask yourself whether the property you’re buying is the area you really want to reside in. It’s no use buying a property which sits in an area that you dislike living in. So, do avoid this mistake! Because when you do find that you don’t want to live in such area, you will easily lose your option fee.

• Next, ask yourself on how you are going to finance this property when the lease term ends as well as on how you are going to cash out your seller. A plan is essential. Or else, you will lose your option fee. It is important that you should only buy a property on a lease option if you really know that you can finance it at the end of the lease term.

• Lastly, you also need to ask yourself on how much you can afford to pay monthly. The lease is FRI, which means, “full repairing and insuring” lease. Therefore, you will be handling the repairs and so a rental payment of 30% lesser than the market rent is sensible enough. You can also be creative by taking a portion of your monthly payment towards your purchase. However, you will be paying above the market rent. But, of course, this will all depend on your agreement with the seller.

2. Next, find a property which you like to buy. Make sure that you can afford the property you like to buy. To attract more and more sellers, you can place an ad in your local paper. Try using this add and have it posted on a piece of paper in letterboxes of your target properties:

Professional Couple,
Looking to rent a 2 Bedroom Property in the local area
with the Option to Buy

Through this advert, you can make sure that only qualified owners will be calling you. It’s best to deal with sellers who aren’t in need of a good amount of money, or those who have less or no equity, or you could also deal with frustrated landlords.

3. If you’ve finally made your seller agree to a lease option, then you should now discuss the terms of the lease option. Ensure that the following are well discussed:
• Purchase price
• Term of lease option. It’s usually between 12 to 60 months. However, if you are buying from sellers who don’t have sufficient equity, the lease may be longer because they are expecting money. They will be using the said money to pay the bank.
• Rent Credits. Determine whether a portion of the rent will go towards the purchase.

4. Responsibly make your monthly payments. These are done similar to renting a conventional property which you can directly pay to your seller. If the seller has insufficient equity, the payments should be made directly to bank and the surplus payment to the seller.

5. Assess whether home improvements have to be made. If so, do increase its overall value. Remember, whatever value you add to the home is your equity. The more equity you have on the property, especially when you exercise your option, your chances will be higher. You will then have a favorable mortgage in terms of home loan interest rates and the amount you lay down as deposit.

6. Two or three months before your lease term expires, ensure that you apply for a home loan. Seek assistance from a mortgage broker. Ensure that your chosen mortgage broker can easily access various mortgage products in the market place.

7. As you receive funds from the mortgage company, your solicitor will send the money to the seller. Cheers! You are now living in the house of your dreams!