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Below RICS Value Portfolio Builder
- Introduction
- What is Below Rics Value, BRV?
- Frequently Asked Questions
- What Guarantees Are There?
- Areas Available
Lease Option Portfolio Builder
Lease Option Portfolio Builder - Frequently Asked Questions
Q: On average what is the purchase price?
A: This varies dependant on your county of choice and is a matter of local research before choosing area.
Q: How many deals will I be offered in the 9 months?
A: During the 9 month portfolio builder programme, you will be offered sufficient deals to meet the £1m acquisition target. The exact number of deals offered will vary by region and will depend on the individual property values. You have the rights to accept or reject any deals based on your own reasons and preferences.
Q: Will the portfolio be cashflow positive and if so what are you estimating?
A: Cashflow will be in the region of £80 - £200 gross per property, enough to sustain the properties in decent lettable condition. The properties are checked for ready to let condition or made ready to let before adding to portfolio. The guarantee is that if there is not sufficient funds from cashflow to sustain any portfoilio expenses, then we will pay it (this guarantee applies to reimbursing necessary expenses that are proved to be in excess of total income generated by the portfolio prior to the date the expenses are incurred). If necessary, with your agreement we will put Tenant Buyers in from www.RapidTenantBuyers.com who will increase cashflow and buy at a preagreed price that you are happy with.
Q: How will you source the properties?
A: We spend in the region of £10,000 each month on online advertising to attract motivated sellers and lease option vendors. Our web presence includes www.mortgagerescuenetwork.com, www.rapidpropertylettings.com, www.areallyquicksale.com, www.rapidpropertybuyers.biz as well as 3 lead generation partners www.sellhousefast.co.uk , www.webuynationwide.co.uk and www.sellpropertyquickly.co.uk. In addition to this, when a client buys the Lease Option Portfolio Builder service, we place consistent advertising in local newspapers.
All of this marketing is done with the intention of generating enquiries (leads) which our team then supportively call and where appropriate agree a deal.
Q: Will this scheme have an effect on my Rapid Property Investment postcode subscription?
A: Absolutely not! Some of you may already have paid for a postode subscription from Rapid Property Investment (see here for details). We would like to reassure postcode subscribers that ANY information we obtain from vendors in a subscribed postcode will be forwarded directly and exclusively to the subscriber. No-one else ever has access to this information, and deals sourced for Portfolio Builder clients must come from non-subscribed postcodes, or from separate advertising campaigns and offline sources. Postcode subscriptions are completely unnafected by this project
Q: What exactly are the deals? Are they sandwich options, in other words is it a complete deal with tenant/buyer? or just the seller part?
A: The deals are Lease Options or EDC (Exchange with Delayed Completion), you do have the option to put tenant buyers in if you want to, this would have the effect of increasing cashflow but would require you agreeing to fix a selling price now and perhaps therefore making a much lower future profit/ capital gain.
Q: How does the portfolio deal compare with buying single deals from www.RapidPropertyDeals.com?
A: When buying single deals you are competing with our database of 20,000 investors and there are no guarantees that a deal will come up in your area. The portfolio builder programme benefits from specific, proven local advertising to generate deals in your area. Costs of buying single deals are similar when available and these do not come with any guarantees whereas the Portfolio Builder Programme has 4 superb guarantees.
Q: There is a 3 year guarantee, please explain a little more and why 3 years?
A: Our commercial view is that this is a viable guarantee for us to offer, we can check that a property is in suitable condition at the beginning and by offering 3 years it gives our clients a lot of comfort.
Q: If I don't take the deals that are offered then I can claim a pro-rata refund. How do you work that out?
A: To clarify "Pro Rata" ... You are paying the builder fee to acquire £1m estimated value, if you only agree to purchase 500k value within the 9 months, you would receive a 50% refund of your fee. If you purchased £750k value, you would be entitled to a 25% refund.
Q: What happens if you go out of business?
A: It is important to be in business with people who are making a lot of profit. The Rapid Property Group of businesses now have numerous successful and varied projects, covering all aspects of property investment. The business is more solid than ever. Nevertheless it is a limited company and any guarantees would effectively be worthless if the company folded so it is best to do your own research on a property's viability before proceeding, looking at the guarantees as a bonus perhaps. Of course, we have no plans to go our of business, on the contrary, we have exciting plans for new sustainable and very profitable projects.
Q: Can I buy more than one area? Any chance of a discount?
A: You are very welcome to buy more than one area, but we cannot reduce the fees which are neccessary to cover our national advertising costs. In fact it is very likely that we will be increasing the price monthly due to customer demand.
Q: Which areas perform better in terms of cashflow on these deals than others?
A: There really is a balancing act between cashflow/yield and potential for capital growth/ stagnation. Clients should choose their areas carefully and with due consideration to their own strategy. This portfolio builder programme should be looked at with a long term sustainable view and not really a shorter term cashflow strategy.
Q: How do we assess value of each property to get the £1million pound target?
A: Properties are extensively research using online current and historical resources, site visits and the Hometrack Valuation tool. In the event of disagreement on values, you, the client are under no obligation to accept each specific deal.
Q: A million pounds will buy many more properties in some areas than others... what are you basing the 1 million figure on?
A: This is absolutely correct and we had to take a view on the fairest way to present this opportunity. For example it would not be reasonable to charge the same for 1 London property as for 1 Sunderland property, the Market Values and potential capital growth are so dissimilar. The fairest way is to charge a fixed fee for the same market value of portfolio. In this way, our clients can take a view, by selecting the appropriate counties, on whether predicted capital growth or yield or a balance of both is important to them.
Q: What will be the term on the lease option deals?
A: The term of each deal varies between 6 -19 years, with an average period of around 9 years.
Q: If any properties need to be readied before adding to a portfolio, where the funds come from for this?
A: Properties will be ready to let or funds will come from the 16k investment or from cashflow from other properties acquired as part of the portfolio.
Q: How much extra income per property do you expect from tenant buyers?
A: You should expect in the region of 20% additional rental income. To achieve this, you would contract to sell the property, and when the sale completes it is likely to be at a Below Market Value price so it is a personal decision of which strategy is most suitable.
Q: What is the difference between "vendors legals" and "buyers legal administration"?
A: We have deliberately used different phrasing for these two terms because they are treated slightly differently. For enforceability and irrevocability it is critical in a Lease Option transaction that the vendor is legally represented. The investor and the team have drafted the paperwork and so can represent themselves. We do check everything and help case management via our in house team comprising of a former Conveyancing Executive and a legal consultant.
Q: Is it possible to purchase these properties through a company rather than individually?
A: Lease Options can be bought in personal or company names with no impact on the option, they are fully assignable and so can be held now as suits you best and assigned later to whichever party you choose. If you choose to purchase under a company name then it will be best to also make payment via the company
Q: What if I can't get finance at the end of lease? Can I sell the property?
A: Yes the contracts are fully assignable so you can sell and bank the profit or assign to a joint venture partner.
Q: Is there any preferred type of property?
A: Predominantly 2 and 3 bedroom houses.
Q: How much cash buffer should i have to oneside incase of voids etc..?
A: We include this in the cashflow figure, with each property cashflowing 135-150pcm gross to ultimately break even. It is a good idea to have a few thousand per property fall back money.
Q: Is this a FULLY managed service?, i.e hands off in terms of you source, do a deal, instruct the rental agent, organise any pre-tennent works, sort epc's, gas safetys etc..., and let, transfer of utilities, Or are there exclusions?
A: This is not a fully managed service, although we will help and guide you, you will be responsible for instructing a letting agent or self managing.
Q: Do you do leaflet dropping, door to door?
A: In some areas we do, but mostly we rely on local newspapers and national internet presence.
Q: How involved can i get?
A: We would like your involvement in approving deals as well as managing your portfolio effectively.
Q: I normally want as long as possible on a lease option, i.e 10 years, can i request what i want from this service?, e.g 5-10 year options only, low mortgage liabiltys only?
A: We would work to provide you with the best possible deals, looking for longest options, lowest mortgages and lowest Purchase Prices, it is important however that this is balanced with realism and a desire to act quickly and build a portfolio when the economy most supports such a project.
Q: What if the owner is negative equity or decides to take out further lending on his property?
A: Alot of the time vendors are in negative equity hence why the L/O comes into play, If there is more debt than we can offer from a straight sale. We will not generally put negative equity properties in to portfolios unless there were other outstanding features of the property or a really long option period perhaps 12-15years, but would sell such deals in the shop. Once the vendor has signed all paper work to go ahead with the lease option they will be signing the property over to us or yourself. Once we have completed the vendor will not have anything more to do with the property so will be unable to ask for further lending on the property in most cases. In some cases where the venodr has no mortgage or a little mortgage they may takle further lending but only up to the exercise value of the option, your interest is protected by a Restriction RX1 and a notice UN1 on the property title.
Q: What happens if interest rates rise?
A: We will only place low tracker mortgaged, fix rate mortgaged, or fixed lease amount lease options in portfolios, all others will be offered for sale in the shop. Risks of rate rises are mitigated by the gurantees that Rapid offers http://www.rapidportfoliobuilder.com/lo.php?cmd=guarantees. It is important to treat options as you would normal Buy To Let Investments in that long term they require management, planning and risk mitigation. We hope to help with this by choosing those deals that we view as most solid.
Q: Will you be managing the property until the end of the lease term?
A: This is not part of the LOPB service, but if you would like us to manage the problem, we will be happy to do so, for an additional fee.
Q: What happens if we go into dispute, or I am not happy with the way things are doing? Is there a resolution process that we can agree now?
A: We want you to be happy at all times. If there is an issue we will always try to resolve it. However, if we are unable to resolve an issue to your satisfaction, then you can always fall back on the pro-rata refund outlined above.
Q: Who will carry out the legal review of the documents?
A: Our solicitor drafts all of our paperwork. Everything is done 100% legally.
We hope you are excited by this initiative and look forward to working with you to build your superb Lease Option Portfolio.
If you have any questions, please email team@rapidpropertygroup.com, call us on 0845 459 6103 or post on Tycoons Forum