Huge profits in property using other people's money.
Many people fail to make profits in the property market
because they think it takes a lot of expert knowledge,
experience, and much capital. Now having capital of your own
will always make life easier no matter what business you are
in, but surprisingly, fortunes have been made by people who
have used money which is not theirs.
In order to raise capital you can always borrow, assuming
you have a suitable credit rating, but better still, buy property
for a third party using their money, and take a commission
from them for your services.
You need to be able to find properties, like repossessions,
which you can buy at a far lower price than the market price.
Find clients who are after a particular type of property. The
reason why they will allow you to aquire property on thier
behalf is that you will be able to supply them at a substantial
discount off market value.
Let us say that you can obtain a property, a repossession
which you can buy for $80,000, but you know the market
value in that area for that type of property is more like the low
$100,000 mark. Get a professional valuer to value the property
and survey it at the same time. The survey will save you
finding out about any structural problem after it's too late,
and the valuation will give you written confirmation of its value;
lets say $110,000. The valuation and survey cost will be around
the $245 mark.
You now need to negotiate a contract with the mortgagee to
sell you the property for $80,000, and find a buyer who is
willing to buy the property off you for say, $104,000, giving the
purchaser a saving of $6,000 off market price. A further
incentive is to pay the purchasers 5% deposit making your
offer far more attractive - in fact saving him around $11,200.
Nevertheless, after your own legal fees, you will still come out
of this transaction with around $12,000 profit. This is a popular
method with people in the know, on making profit without any
capital.
Regarding the $5,200 deposit, the buyer' lending bank or
building Society will require this amount o be paid to them in
order to release the full $104,000 to you, you will have to pay
this amount, on behalf of the buyer, directly to his lender. If
you do not have this deposit in cash, you can raise it using
methods described in the other guides in this series, using
credit cards. Ultimately you get this deposit back once the
transaction for $104,000 is completed.
This transaction is called a "back to back" deal, and the
selling and buying from the original mortgagee is carried out
on the same day. Therefore, you will not actually ever own the
property - the deeds are transferred from the original owner
to the new buyer and you, as the original owner's agent
simply collect the profit.
Another method is to raise finance through personal loans or
a second mortgage on your home, if applicable, and buy the
property for cash.
Property auctions are a very good way to buy, usually at a
price well below true market value. You could use this method
to obtain a property for a buyer who will committ himself to
buy from you once you have secured the property.
At auction you can secure a property for a deposit of 10% of
the sale price, and after having paid the 10% you have
between 6 to 8 weeks to complete the sale. In this time you
arrange for a final buyer to raise his finance of 90%, and buy
the property off you. Your selling price is likely to be 20 -
30% greater than the price you secured the property at.The
final buyer's incentive is that he has purchased a property at
10% lower than the market price, and has no deposit to
make.
When you aquire a property, do have it cleaned and any
minor defects put right. Often, by having the property simply
decorated will increase its value and make it far more
attractive to a potential buyer. Get onto friendly terms with a
local surveyor and negotiate a discount for putting work his
way on a regular basis. Call into local estate agents and ask
them to keep you informed of any suitable repossessions,
and if there are points you need to know about, pick the
brains of your estate agents and surveyors.
