Could assisted sales be the ultimate property investing strategy?
Spoiler alert: I think they come pretty darn close.
In this post, I'll cover how they work...
AND the rather splendid benefits available to you, the investor...
Let's do this...
Probably the best way to describe an assisted sale is with an example...
Imagine we have a property that a family has inherited from their elderly mother, who passed away recently...
They've had the home on the open market with a local estate agent for a few months now.
They're getting viewings, but nobody has "bitten" yet.
The family are becoming more and more "motivated" to sell as time goes on, as they have an inheritance tax bill deadline looming in the near future.
The problem is that the property isn't in great shape.
The late mother hadn't done any improvements to the house in maybe the last twenty years of her life.
It's clear that the property is not selling because it needs repairs and general upgrading.
The market isn't too bad, so the property would probably sell quite fast if it was brought up to scratch.
But the family doesn't have the funds to do the required work, so they've contacted you, via a leaflet that you put through their door.
They want you to buy the property from them...
But you don't have the funds right now, and plus, it's hard to get a mortgage, being full time property...
The only thing left is for you to "package" the deal on to another investor for a fee...
That obviously means that you won't get the full benefit of the profit to be made in refurbing the property and flipping it, but that's better than nothing...
BUT what if there was a way that you could get your hands on that tasty flip profit, without needing a deposit?
AND without needing to get a mortgage?
Well, with the assisted sale strategy there is.
And here's how it works...
First, you agree a price that the seller will receive for the property once it is sold.
This will normally be the price that the property is worth in its current condition (that is, if a buyer were available).
Next, you go ahead and finance and organise the work that is needed to get the property up to good saleable standard.
Obviously, if you don't have the funds for that, then you can easily seek a joint venture partner to fund it for you, and split the profits with them.
You could even consider bringing the contractor in as a JV partner.
That way, instead of coming up with the funds, they effectively "finance" the cost of the refurb, until it is released from the sale proceeds.
Once the work is done, put the property back onto the market, to be sold to a first time buyer, for example.
Note that we're not marketing to an investor here; the property is being sold at full retail price to a home buyer.
Now being in top notch condition, the property will likely sell pretty quickly...
And when it does, from the proceeds of the sale:
Let's put some flesh on the bone here with some real numbers, to illustrate the kind of gains to be made from this strategy:
Property worth in current condition: £80,000
Cost of refurbishment: £10,000
Sale price after refurbs: £130,000
Paid to seller at completion: £80,000
Your gross profit after refurb costs: £40,000
If implemented correctly, the assisted sale strategy really is a near-perfect strategy, for these reasons:
The assisted sale strategy only works if you're able to add significant value to a property, fast.
If a property is already in walk-in condition, then this strategy won't work, and you'd be better off considering a different approach.
The assisted sale strategy is pretty much a dream strategy for all concerned...
But it's obviously very important to lock the agreement down tightly, with the appropriate contracts beforehand...
If you don't, then you could end up refurbishing someone else's property for free, and they disappear into the sunset after it sells, leaving you with nothing!
That's a big component of the Assisted Sale Intensive program that my friend Trish has put together.
Trish is the only person on the planet I know teaching assisted sales.
And frankly, she's about the only person I'd trust to learn it from.
Check out her course here, before she puts the price up closer to what it's worth!