If you tell most people they can own a property for free, nothing, zero cost…they are likely to view you with more than a bit of doubt and suspicion.
However, incredible as it may seem, it is true…it is possible to obtain a property for zero cost.
So that we are clear, a “free property” is a property you get to own at zero cost to your bank balance once everything is done and dusted.
This blog takes a quick look at three “free property strategies” to give you an insight into what is possible.
From there you can explore further any strategy which takes your fancy.
Of course, none of the alternatives are quick, simple and involve no effort on your part.
However, they are real and legitimate property strategies and if you employ the time, effort and dedication to learn them you could be picking up your very first free property in the not too distant future.
1. Massive discount freebie
You can end up with a free property if the seller is prepared to give you a huge discount on the true market value.
That is rarely going to happen because the seller likes you; most likely the seller will be highly motivated to sell for any one of a number of personal or money reasons including:
- Divorce or relationship breakdown
- Impending repossession of the property
- Threat of bankruptcy
- Severe money/debt problems.
A highly motivated seller you may come across is a builder or developer in severe financial difficulties at a time when the property market is in crisis.
If the discount is large enough, 30% or more, you may be able to cash purchase the property with your own money and/or a short-term private or bridging loan and then later remortgage it on long-term 75-80% LTV mortgage without needing to add value.
Your deposit and numerous costs of purchase including stamp duty and legal fee are all taken care of by the large discount.
If the discount is more modest, you will only be able to secure the property for zero cost if it has the potential to add value equivalent to a 30% plus discount once all the costs of purchase, works and financing are taken into consideration.
2. Delayed completion freebie
Using the delayed completion strategy is another way to end up with a property for nil cost.
With this strategy you typically find a property with the potential to add value and agree to buy for the biggest discount you can negotiate, on the basis that completion will be delayed – usually for a few months – enabling you to carry out the value-adding works between exchange of contracts and completion.
You purchase the property and carry out the works using your own and/or other people’s money (OPM).
Upon the works being completed, you legally complete the purchase and later refinance on a long term mortgage – leaving none of your own or OPM in the deal.
3. Option to purchase freebie
You can also secure a free property by using an option to purchase.
Using an option agreement, you secure – for a modest fee – the right but not the obligation to purchase a property within a fixed timescale for an agreed price.
The ideal property will be one where you can add value by doing things such as:
- Securing planning permission for change of use or development
- Carrying out building works, refurbishment, repairs or improvements
- Splitting the building into two or more units each with its own separate legal title.
The value you add should be at least 25% more than the price you agreed – taking into account all building, financial and other costs, fees and charges.
After adding value, you can proceed to purchase the property – using long term 75-80% LTV finance, leaving none of your own or OPM in the deal – acquiring the property for zero cost.
4. Importance of advice and assistance
The practical, legal and financial structuring of all three strategies is non-standard, complex and prone to errors.
Unless you are fully familiar with a strategy, and have carried it out successfully in the past, it is highly desirable to seek expert advice and assistance from the outset.
These strategies involve a considerable amount of legal paperwork, and it is particularly important to hire a solicitor with proven knowledge and experience of your chosen strategy.
SO YOU WANT TO BUY A PROPERTY
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From one property to two (easy steps you can take to own a second property)
Buy a property with a property (12 ways to raise a deposit using a property)
The “free property strategies” covered in this blog highlight the fundamental point that property investing is not just about money; it is also about time and knowledge.
If you are prepared to put in the time and acquire the knowledge, you can sometimes get by just fine without the money.
Have you ever acquired a property for zero cost? How did you do it? Please leave your comments below.
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Rebel Property Coach
My website is: www.rebelpropertycoach.com