An Assisted Sale (AS) is an extremely flexible property strategy and one of the best bits about this type of deal is that everyone can benefit.
By that, we mean you can package up the deal and profit from it, but you can also split that profit with the vendor as well as your investor. Another bonus of AS is that it can also be a no-money down opportunity. This makes it a great way to get started in property if you don’t have much of your own capital to put down.
What is an assisted sale?
So, by now you are desperate for us to explain what an AS is. Well, as the name suggests, it’s when you ‘assist’ a vendor to sell their property. Why you would do this is for a number of reasons. It could be because the property has been vacant for some time due to the fact it is simply not selling in its current state. Then again, it could be that a family member has inherited the property and just wants to sell it quickly and move on. Another reason could be that it badly needs modernisation and the vendor doesn’t have the money – or inclination – to do it.
Watch the video to learn how Nadia, our franchisee, made £60,000 on an assisted sale:
How to structure an assisted sale
There are a number of ways you can structure an AS. One of the most popular is a refurb property, where you get a JV partner on board. He or she will help fund the project while you project manage the modernisation work and arrange the sale itself.
An example of an AS would be if a property worth £200,000 had been on the market for a number of years and needed a new bathroom and kitchen to appeal to today’s buyers. This might take £20,000 but in doing so, the property could be revalued at £260,000. This results in a £40,000 profit. You give the JV partner their original sum plus a share of the profits, and you also give the vendor a share.
Legal agreements for a JV partnership
There are several legal agreements you can use when going into a JV partnership. You could, for instance, use a JV Agreement (this can also be used with a vendor). An alternative is to use an Option Contract or a Management Agreement and an RX1 Form to take charge of the property.
Benefits of an AS
- You don’t need to take out a mortgage or pay any Stamp Duty
- The Six-Month Rule doesn’t apply
- You can get access to money without having any in the first place
- Selling at auction means you can have money in your bank within six to eight weeks of starting the project
Tips for an AS
When you come to sell, always pay attention to what similar properties in the same area sold for. That’s because marketed prices on property portals are often over-valued.
Try and have more than one AS on the go at the one time, over staggered intervals. That way you aren’t waiting months for money to come through ie that you are half way through a second AS while one completed property sells. In other words, build a sales funnel.
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Author
Chris Kirkwood
