Hello,

I'm after a bit of advice.

I'm doing a few refurbs which generally have been approx 6 months duration. I’m now at the point where I can turn around refurbs in 1-2 months max.

Are there any creative ways to sell on before the 6 months since my purchase, or get my money out at the very least?

I have been told that the only way I could do this was through buying the property in cash. I’m not sure why this would work, as I cannot see why the source of funding the initial purchase would have any influence over the fact that it has been purchased less than six months ago.

Any help would be appreciated.

Aman.

As I understand it, the six month rule has been brought in by the lenders which is why buying cash circumvents the whole six month restriction as there is no lender involved. If you buy cash you can do what you like with it.

One way round it would be to try and pick up the property on an assissted sale. So, you find a motivated seller (someone who's been let down a couple of times, relative who just wants rid , someone on the brink of reposession) negotiate a price both of you are happy with, you do the work and marketing and anything over the agreed price (strike price) you go 50/50 or 75/25 on. That way everyone is happy. The vendor knows he has a definate sale, he stands to make more than the agreed price and he's got you acting for him as a kind of super agent. You, on the other hand, get to pick up a deal with no mortgage expenses and red tape and you make money (so long as you've agreed the right strike price). Don't forget, you make your money in the buying, not the selling.

You'll need your solicitor to draw up the paperwork but that shouldn't be a problem.

Good luck

Rob West

__________________
If you can fill the unforgiving minute
With sixty seconds worth of distance run,
Yours is the Earth and everything that's in it.

Hi Aman,

The buyers will generally find it difficult to raise a mortgage to buy from you based on the market value because of the 6 month rule. They can raise a mortgage based on the purchase price you paid but obviously that's not much use

If you are selling to a cash buyer it's not a problem.

Rob is correct, the assisted sale is great if you can do it. Rather than buy the property you take an option over it, do it up and sell it on the open market. If the seller has owned it longer than 6 months you won't have a problem because you haven't bought and sold it. Also you save on costs like stamp, legals, mortgage arrangement/exit fees etc and if the seller is on a good mortgage rate you can just keep up the payments on that instead of taking a more expensive mortgage yourself for the deal. You can watch a video of us talking about an assisted sale here

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Parmdeep Vadesha
Managing Director
Vadesha Properties Ltd

“the species that survived were not the most intelligent –they were the most adaptable to change” Charles Darwin

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I imagined the cash buying solution as below:

Mr X sells house to me. I pay cash. I sell house after 2 months of ownership to Mr Z. Mr Z buys using a mortgage. Mr Z gets refused mortgage because I have owned property for less than 6 months.

I think what you proposed was:

Mr X sells house to me. I buy using mortgage. I sell house after 2 months of ownership to Mr Z. Mr Z buys using cash.

Is that correct? If so, not sure many people will be able to buy cash.

Or have I got the wrong end of the stick?

Hi Aman,

Yes that can work. You will have to look out for a mortgage with no redemption fees as you are discharging the mortgage before the initial discount period but what you are proposing works.

Other than that try to do it on an option, do up and then sell using the Ugly Duckling PowerPlay here:-

Lease Option PowerPlays - 5 Lease Option Powerplays

Richard

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"Forget the other property workshops......This one's the best!"

Richard, I gotta get me one of those profile pictures. My postage stamp pic looks like it was taken from the other end of a 100 metre track!

Incidentally, nice to meet you guys last night.

Regards

Rob West

__________________
If you can fill the unforgiving minute
With sixty seconds worth of distance run,
Yours is the Earth and everything that's in it.

Hi Deep,

In your video Hanif mentions signing an option to stop the mortgage lender proceeding with the repo. However, an option does not sound like enough security for a lender to do so. I thought you would have had to exchange on this property to gain time to market it?

Hi Emmanuel - yes in some cases the lender wants to see an unconditional exchange of contracts. Depends who we're dealing with

__________________
Parmdeep Vadesha
Managing Director
Vadesha Properties Ltd

“the species that survived were not the most intelligent –they were the most adaptable to change” Charles Darwin

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Hi Deep,

Thanks for the clarification. Out of interest, if you were to exchange on this property to gain time and sell on open market, is the buyer on the open market buying from you (since you've now exchanged) or from the original owner? It can't be from you since you will have the same 6 months restriction, right?

Or is it the case that assisted sales only work when an option is taken out?

thanks.

Hi Emmanuel,

If you've exchanged you are legally obliged to complete. To pass on to a third party you'd have to cancel the contract.

That's why it's much better to do on an option contract. In this example they didn't say they'd exchanged contracts - they just spoke to the lender in terms the lender was happy with. You only have to exchange contracts to get the judge in court to agree. But sometimes the lenders do insist that they'll agree if you've exchanged contracts.

Depends who the lender is. Who is doing the asking/negotiating with the lender.

Bottom line don't exchange contracts unless you have to as much better with an option agreement in place.

Rx

__________________
"Forget the other property workshops......This one's the best!"

If you do an extended exchange ensure you can transfer the contract which means it doesnt have to be cancelled although be carefull as pointed out you are commited once you exchange.

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North Manchester letting agents, property traders, houses bought for cash, finders fees paid,mike@brentwoodinvestments.co.uk

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Hi Guys,

With the assisted sale, what happens to the arrears and existing mortgage payments? For example who makes the payments and takes care of the arrears?

A problem can arise with this as when you have exchanged contracts you are tied up with English Law and the bottom line is that you have to complete or you can be liable for a 10% penalty and other losses a seller may incur. I go caught out with this when we used to use exchange contracts and subsales - beware.

If you pay off any debts you are taking a punt as vendors can simply decide not to sell. Again, I have done loads of assisted sales and paid off arrears and have been shafted. Even with TR1 forms signed the vendors can pull out unless you go to court.

Best way if you do not want to or cannot buy cheap enough is to get an option agreement and a good solicitor who will negotiate with banks and stop repossessions (90% of the time this works) without you paying a penny and you work quickly to find a buyer. Try not to use exchange contracts or pay a penny from your pocket - you will win some and lose some - although if Deep has made £30K he can easily afford to lose the odd few

Thanks everyone for your valuable input!