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  • Wanted & Recommendations

    R2R & Lease Options - reliable sourcers?

    Hi all,

    My friend has just come into 10k inheritance and is looking to me for ideas on how to invest it. Given the advertised returns on R2R and Lease Option deals I've been trying to explore this area and have contacted quite a few people in the field, but none have come through as of yet.

    This leads me to ask - who are the leading figures in the space and has anyone on here actually bought a deal that played out well from one of them?

    Many thanks in advance

    Alex

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    Hi Alex,

    I often feel there are more people selling courses and sourcing deals on Rent to Rent and Lease Options, than actually doing them!

    In the recent case of Ben Rogers, cited as one of the UK's leading experts on LOs, when he went bankrupt for over £2 million, the IP found that he actually only had 8 LO properties that were all under performing!

    Daniel Burton, another expert who claimed to be making £30K a month from rent to rent, also crashed and burned. 

    I would advise your friend to steer well clear of such strategies, training courses and unregulated soucers.

    I would recommend them to build up their cash pot and buy a property for cash and use that to build up from.

    See - Where is the cheapest house in England? 

    At least they will have something to show for their hard earned cash.  If they get involved with UNREGULATED R2R and LO sourcers and trainers, then they will likely lose their inheritance imho.

    And here's a thought - if you could really control property with no money, wouldn't you be controlling as many properties for yourself, rather than selling what amounts to the 6 numbers to the lottery for a few hundred or thousand quid?!

    Hope that helps?

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    Hi Vanessa,

    Thanks for your input. And yes, the exact same things have indeed crossed my mind - endless facebook feeds about trainers and their mentees getting deals, importance of great customer service etc and then not responding to enquiries to purchase said deals.

    Ideas to grow the pot include investing in property via crowd sourcing platforms, Amazon and private lending, but if you have any further suggestions please do let me know.

    Thanks

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    Hi Alex,

    I already gave my suggestion above.  Find a cheap property and buy it outright, or put their £10K towards a slightly more expensive property using a BTL mortgage to leverage.

    I am not keen on any of those other suggestions - sorry to say.

    I regard them all high risk.  If your friend is happy to lose their inheritance, then by all means give them a whirl.  My answers are based on not risking their inheritance!

    BTW - Facebook is one of the biggest originators of scams so I would be very careful about getting involved with any of them.  It's like the Wild West and a lot of newbies lose a vast amount of money after responding to a Facebook post - just as the followers of Ben Rogers, Daniel Burton, Phil Martin, Mark I'Anson etc. found out to their considerable cost.

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    hi vannesa i was planning to do a 9 weeks R2R course with jacquie edwards which I believe she is a reliable source. I am in the same situtaion as well. 10k with me and i am planning to invest in myself this choosing the R2R stragties and generating clasflow from there? What are your views on that. Many thanks.

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    Hi Rajen,

    Someone asked something similar on another thread a couple of days ago, so I am reproducing my reply:

    There are four different things to consider here:

    1.  The viability of Rent to Rent as a strategy

    2.  Why people who claim to be so successful at it wish to create more and more competitors for themselves and spent large amounts of their life in a training room or running a marketing machine.  They must really love their job, right?!

    3.  Whether paying for expensive education will make you wealthy, as most of these courses claim ...  (But if R2R is not a viable strategy, then surely you would be wasting your money?).

    4.  How much money did successful delegates giving testimonials (or indeed the trainer) start out with?  If they had a £1million inheritance, then their chances of success were far greater than someone who had to borrow money or put the cost of the course on a credit card in order to be able to attend.

    5.  For "ownership: strategies, did the individuals in question qualify to access BTL finance?  If they did, they will be able to scale up far more quickly than someone who does not qualify for finance.

    Authentic education is very important.  You can never know it all and you can never learn less.  Education helps mitigate risk.  

    By authentic, I mean education that:

    1.  Is provided by someone who has been undertaking the strategy for a minimum of 10 years and been through the "down" times as well as the good times.

    2.  Does not have a sales agenda or up-sell agenda behind it.  i.e. you are being given information in your best interests, that is tailored to your personal financial situation and goals, and that will advise you of the risks as well as the rewards.

    3.  That teaches strategies that work in the current market conditions and with the current financial products and that you, as an individual, can realistically achieve with your personal starting point.

    The problem with the property education sector, or, as I prefer to call it, "wealth creation" sector is that it is completely unregulated and big claims can be made.  When things turn sour there are very few routes of redress and Property Tribes has heard from people who have collectively lost millions of pounds.  These stories can be found in our Landlords in Distress category and there are a lot of learnings to be had by reading them.

    By the way, the word "property" could be replaced with "gold", "bitcoin", or any other type of investment.

    Only today on facebook, I read an advert where someone who came into the sector as a trainer around 2 years ago having been on a "train the trainer" course, describes himself as one of the UK's top business entrepreneurs having previously been involved with multi-million pound businesses and claims that he has a personal portfolio of over £12 million!  

    When I did my due diligence on him, there was no shred of evidence of wealth or previous success whatsoever. He has created a very good back-story that is impossible to verify, but most newbies do not understand how to undertake due diligence and they are happy to believe it because it means it might be possible for them too.

    As always, theory is altogether more different that practical experience.  Would you like to be flown in an aeroplane where the pilot has 20 years experience and thousands of hours of flying time, or a plane where the pilot read a book about being a pilot and had never touched the controls or overcome problems in-flight?

    A property training business is likely far more lucrative than running a property portfolio (when comparing "like for like" time frames) and probably a lot quicker to scale as you can buy your place into training networks, systems, and marketing blue-prints so that you are an "instant guru".  You don't need much capital to set up a training business and with facebook and access to other free social channels, you have a ready-made audience of people who will want to believe your claims, so you don't even need to factor in much marketing spend.  The entry levels of money required to become a trainer are far lower than funds needed to start investing in property.

    The bottom line is that you DO need money for property - just like any other business.  And like any other business, if you do not have money to back you up, you are putting yourself at far greater risk.

    Even if you undertake R2R or lease options which are claimed to be a "no money needed" strategy, you still need money to set the property up, to be compliant, to pay for repairs and maintenance, to pay the rent to the landlord if you are unable to rent out all the rooms.  If a boiler needs replacing, as a for instance, that can be £1200 to £3K.

    In my opinion (and of course I may be biased), one of the of the best places to find authentic education is where there is a "hive mind" like a landlord forum i.e. multiple views and opinions expressed, not a singularity that gives you their version.

    Another is undertaking professional training with a trade body like the Residential Landlords Association or ARLA.

    Another is finding someone who has achieved what you want to achieve and asking them if they will mentor you.  Note:  They probably do not offer training services!

    However, none of these methods will promise you that you will be a millionaire in a year with no effort, so they are unlikely to attract someone who is seeking easy riches.

    "Selling the dream" is a multi-million pound industry and rife with scammers who use sophisticated marketing techniques to relieve naive and gullible people of their money.

    You may want to choose to see the irony in someone who claims to be financially free, standing in a dingy hotel room in Bradford on a Thursday evening, trying to sell you a training course.

    If they were really that successful and wealthy, wouldn't they be spending time with their loved ones, doing things they enjoy, and perhaps doing some philanthropic deeds?

    I can't imagine anyone actively choosing presenting a pitch to a room of strangers to being with their family.  Therefore, there must be a very compelling reason for that and that is that they can make a lot of money from such an activity.  Nothing wrong in that of course, but it is the reality, and not unreasonable to suggest that it is not the airy fairy happy clappy reasons trainers typically give.

    A lot of money is made through property education, but it is more likely to be the trainers who are coining it in, creating their property dream and financial future at the expense of their students imho.

    I am personally not against training courses - I have been on many and continue to go on them but CAVEAT EMPTOR and do your due diligence.

    Further insights here:

    Buying property with none of your own money 

    How to do due diligence on a property mentor

    How to use Companies House for due diligence

    Due diligence or die: Lessons learned from the Madoff disaster

    The above links empower you to undertake your own due diligence.  I would like to propose that you do this for the two trainers you mention and report back your findings here.

    This is far more empowering for you than me doing it for you, but if you get stuck, I am sure the community and myself will assist.

    P.s..  A good place to start is their company registration number.  By law, this has to be displayed in a prominent position on their website along with their Privacy Notice.  If you cannot find these, that is an immediate "red flag" imho. 

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    Hi Vanessa

    I wanted your personal thought/advice on this scenario.

    At one of property show some lady was arguing with a rep at a stand that her friend got ruined by getting into LO with a rouge investor.  She was full off anger.

    I was in a seminar where they discussed LO. So I got a chance to talk to one of them.  She said that if a LL is coming under threat of and on the brink of repossession this is one safe option if you don't have money to buy outright.  It gives the LL a get out option of being tarnished with reposition with which comes the tag on the credit report for future loans and business.  She at the time recently did a LO with one of her friend who was just about to be repossessed I think within in one week. He got saved from it and they both are happy.

    I know as the LO the options are cut out for the original owner who has to sell the property if she wants to at the original agreed price. But as she put it we both(Herself and LL) are both going to earn the money from it but the end of lease and he will still get the money agreed at the start of the lease if she so wishes to.

    The reason I came across this tread is because I did a search on here to find out the viability of LO.

    I came across a tenant over the yesterday who said his LL has been given the court order for the lender to repossess the property by 28th Feb.  So he is worried that he will be evicted from a property that he has been in since 2013 and never created any issues such as rent fully paid on time etc.

    I wanted to know if there is an option to save the LL property to save his neck from being repossessed, apart for finding a quick buyer for a quick sale to pay off the lender.

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    You could offer to pay off the landlord's arrears on the agreement of some kind of deal, but to be honest, I would advise you not to get involved in these kind of arrangements.  They are prone to fall over one way or another.

    It is sad for the tenant to lose their home after 13 years, and the best thing would be for the landlord to sell to a professional property buyer of tenanted properties, who would likely keep the tenant in place.

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    I am not an investor so I can only introduce myself as a deal sourcer (Which I have just started and not secured any yet) I don't know how to source a quick buyer by the end of Feb, who is willing to take it on as is.  The rent is quite good for a 2bed in East London though £1400pcm.

    BTW The tenant has been there only 6yrs. Still he calls it a home where his children have grown up.

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    It might not be a deal at all.

    What's the outstanding mortgage balance?

    How much are the arrears?

    Are all the service charges and ground rent payments up to date?  If not, how much in arrears?

    What is the market value?

    Has the property been maintained properly or in need of up-grade?

    It might be that the overall debt is more than someone would be willing to pay for a quick sale ....

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    @rajen 1 of the most interesting things I did was approach the course trainers for actual sourced deals rather than training. I was fascinated to find that not a single 1 of them could provide me with a deal nor even knew anyone who could, which was unsettling seeing as they had a) apparently gained the necessary experience required to teach said courses and b) had apparently been creating hundreds of financially free deal sourcers via these courses.

    This was several years ago so no one specific is in the cross hairs here, but test it for yourself to find out who's serious.

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