With over 20 years’ experience in the property industry and a strong, social-media following, Vincent Wong is an extremely famous face in the Property Investment sector. Wong is the Co-founder of exchange-listed company Wealth Dragons and has had an interesting and varied path to the top. Here, Vincent discusses the ground-breaking concept of Lease Options.
SUMMIT magazine names Wong as the “Father of Lease Options”, given his success in pioneering this financing strategy. What is particularly impressive is he is credited for bringing the strategy to the UK, Netherlands and Malaysia — three unique and contrasting property markets, which demonstrates the global scale of Vincent’s success.
Lease Options are a tangible alternative to traditional mortgage financing and is particularly appealing to those who struggle with income multiples and lack of deposit. Key benefits of Lease Options are that it removes the need for a Deposit and Mortgage altogether. Essentially, investors or holders of the Lease Option take over existing mortgage payments from another property owner. Option holders can then rent out the property for higher than the payments, usually generating a positive cash flow per month.
The five key tips for Lease Options are as follows:-
- Ensure clear contact with seller — It is fundamental to have clear lines of communication with the property owner/ seller of the lease option. Try to limit the usage of third-party estate agents as they can often inflate the prices and costs of the strategy
- Analyse Sellers situation and circumstance- You need to understand the WHY behind the sale of the property. Common circumstances behind motivated sellers include job loss, moving to another country or financial hardships. You must be sensitive and understanding and work together with your seller.
- Customise your strategy — You must consider appropriate timescales of the Lease Option strategy and whether it is a potential Win-Win for both parties. For example, if the seller needs cash urgently they will be more willing to and gain more from a Lease Option deals. Whereas if the seller is less urgent, a deal with a longer option tenor would be more suitable
- Communicating to sellers what Lease Options are- Even some established property investors are not familiar with Lease Options. Clearly explain to your seller the full process and potential benefits, i.e. you will be taking on their mortgage payments and if the property value increases, the seller has clarity around the amount they will be receiving in the future
- Terms of Contract- Vincent has been the pioneer of the legal framework and contract development for Lease Options. Investors must ensure that they seek the correct legal advice
Readers can find out more about the Lease Option process and success stories in Vincent’s book, “Property Entrepreneur: The Wealth Dragon way to Build a Successful Property Business”.