I get a lot of questions asking me about the mechanics of the lease options and delayed completion property deals. These are my favourite way of property investing and in my opinion the best for multiple income streams and are very low risk;

Unlike normal buy to let properties where UK residents have to put down 25% - 30% deposits, foreign investors usually have to put down even more - these types of deals are very different as you only have to pay agent fees and legal fees to get the deal, so no deposit is required.

You are agreeing the price of the property now with the vendor and not having to complete until the end of the term (usually anywhere between 2 - 10 years). This gives you the chance to make a substantial equity / capital appreciation over these years. So lets say for example a property is £100,000 today and in five years it has increased to £140,000 then you would have made £40,000 on the property deal.

During this time you take over the existing mortgage payments on the property, this way you are not having to get a mortgage or apply for credit yourself, so anyone can get these deals no matter what your credit rating is or if you are a foreign investor and cannot get credit. It is becoming harder and harder to get mortgages, so this is the perfect way of obtaining properties, rather than pay 25% - 30% on one property you could get yourself an instant portfolio of properties this way. And you can buy unlimited amounts of these types of property deals.

You would normally put a tenant in the property to pay you a rental income that you would use to pay the existing mortgage and leave you with a positive cash flow each month.

The great thing about these deals is that you can buy or sell them on at anytime during the term, there are a number of strategies for this;

You can sell the option onto another property investor who wants to take the deal from you
You can hold the property for the term then when it is nearing the end and has build up large equity sell it on the open market for a premium

You can put in a rent to buy purchaser who wants to live in the property but is unable to get a mortgage at the current time due to the economic climate, this will give them time to improve their credit rating so that they can eventually get a mortgage on the property. So for example lets say the property is £100,000 then you could offer it to your rent to buy client for say £130,000 at the end of the term. You can also charge them a fee upfront to get the property. So you would never complete on the property this way yourself as your rent to buy purchaser would be completing on it.

So there are many income streams from these types of deals, you have income from the rental, the capital appreciation and the fee.

In my opinion these types of deals are far better than buy to let properties and far less risky and even more fruitful.

Iain Stewart www.wholeworldofproperty.com