Hello Everyone
Does anyone have any thoughts on the Equity Lease idea?
For anyone not familiar with the idea, here is a brief rundown:
Essentially it a long term(5 or 10 year) commercial style lease between tenant and landlord whereby the tenant signs a long term lease (5 years min) and a slightly above market rent (say an extra $50 a week) increasing with inflation every year.
In return the tenant gets a share of future capital gains (say 30%) paid out at the end of the lease. From their point of view it will help the tenant save the deposit for a home at the end of the lease, a home they would otherwise not be able to afford. And there is no risk involved. They would just pay a slightly higher rent than they would normally. Their interest in the property could possibly be protected by a caveat?
From the landlord's point of view the cashflow of the property is improved thereby increasing their servicibility allowing them to buy more IP's. And the long term lease would look good to the lending banks. At the end of the lease, the property can be refinanced to pay out the tenant, or renewed for a further 5 year term.
Any thoughts or potential problems with this idea?
Geronimo
Does anyone have any thoughts on the Equity Lease idea?
For anyone not familiar with the idea, here is a brief rundown:
Essentially it a long term(5 or 10 year) commercial style lease between tenant and landlord whereby the tenant signs a long term lease (5 years min) and a slightly above market rent (say an extra $50 a week) increasing with inflation every year.
In return the tenant gets a share of future capital gains (say 30%) paid out at the end of the lease. From their point of view it will help the tenant save the deposit for a home at the end of the lease, a home they would otherwise not be able to afford. And there is no risk involved. They would just pay a slightly higher rent than they would normally. Their interest in the property could possibly be protected by a caveat?
From the landlord's point of view the cashflow of the property is improved thereby increasing their servicibility allowing them to buy more IP's. And the long term lease would look good to the lending banks. At the end of the lease, the property can be refinanced to pay out the tenant, or renewed for a further 5 year term.
Any thoughts or potential problems with this idea?
Geronimo
