any thoughts on this one?

[JustAGirl]

Hi all
I'm currently looking into an investment strategy of signing lease options, then sub-leasing (may or may not use a second lease option) for higher than the original prices of the lease option.
Has any one got any thoughts as to any legal issues that might pop up for me?


thanx in advance

 

[Jas]

Why not set up a meeting with a solictor? He'll give you a short intro to all the issues, and you can get a feel for all the costs involved as well.

Jas

 

[JustAGirl]

thanx jas....not exactly the answer i was after - i'm after anything that anyone can think of that i could check out before seeing a solicitor....
having said that, can anyone recommend a good solicitor that has an open mind towards unconventional REI techniques??

 

[paulzag]

Hi JustAGirl

Lease Options are attractive on paper and I've sold a few. So far I haven't found vendors willing to do them yet, but I know of a couple.

So the first problem is finding willing vendors. The property market of the last 3-4 years has not been a buyers market.

The major risk in L/O in residential real estate is the various state Residential Tenancies Acts. You can't contract out of those acts. NSW RTA does not apply to contracts including the sale of a property. A L/O is tricky because an option is a contract for the sale of property. Interesting yes?

If your tenant-buyer decides to stop paying rent and not exercise the option you have risk that they will take it to the tribunal and the tribunal will agree they have jurisdiction. In that case the tribunal can determine your rent to be excessive.

I see plenty more opportunity in commercial real estate.

Sandwich L/O that your are discussing is a business not a passive investment. But once you have it set up it is a matter of collect the money until it pays out.

Regards

Paul Zag
Dreamspinner