Equity Leasing?

WebBoard · 6th Mar, 2002

From: Michael McDonald

I was talking to a Henry Kaye graduate this morning, and he was trying to explain a strategy called "Equity Leasing".

He obviously didn't understand it all that well, because he didn't do a very good job of getting me to understand what it was all about.

Has anyone heard of this strategy, and if so, can you explain it?

MicMac

duncan_m · 6th Mar, 2002

Reply: 1
From: Duncan M

No idea.. would it be something like this maybe?

You have a friend with an unencumbered home, you offer to pay him $200pm in
order to use his house as security for short term loans on other properties?

Google didnt turn up much.

Duncan.

Rolf Latham · 6th Mar, 2002

Reply: 2
From: Rolf Latham

Hi Mic Mac

Poor guy, if he cant explain it to you, his friend, how will he ever sell the concept to a funder - a stranger ?

Ta

Rolf

Boyler_Room · 6th Mar, 2002

Reply: 2.1
From: Boyler Room

G'day,

I know they do a strategy that goes a little something like this:

You rent a property from them at an above market payment and they offer you 5% of the equity gain after 5 years. You only get that if u stay in the property for 5 years. The longer you stay the more equity you get. Meanwhile, if the property has gone up 50k, you only have access to 5% of that 50k after 5 years.

It's a way for them to buy at inflated prices and generally guarantee that they will break even or make some sort of gain. They get their above market rent, so they don't go under, and they make it appeal to you thru the slice of equity at the end, albeit a pathetic slice, but equity nonetheless.

That may be what they are referring to. Hope this helps.

Boyler Room
Co Ordinator for ADL Freestylers

WebBoard · 6th Mar, 2002

Reply: 2.1.1
From: LUCJAN ROCZNIAK

This is a multi-part message in MIME format.

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Hi Guys

Boyler Room is nearly right.
The rental time must be 5-25 years the longer the more equity .
The equity % is negotable but usually 20% - 25% of the growth
usualy 5% extra for every 5 years
It all depends on the pearson doing the deal.
Eg price 200k valuation
then after 5 years the valuation is 300k
so there is 100k growth @ 20% = 20k payment to you after 5 years
The rental is usualy slightly higher 6%+ return ( cash flow positive if =possible)
with annual increases of at least 4%
You can have higher rents if they are fully furnished.
I hope this helps.

Luch.R

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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN">

Hi Guys

Boyler Room is nearly right.
The rental time must be 5-25 years the longer the =more equity
..
The equity % is negotable but usually 20% - 25% of =the
growth
usualy 5% extra for every 5 years
It all depends on the pearson doing the =deal.
Eg price 200k valuation
then after 5 years the valuation is =300k
so there is 100k growth @ 20% = 20k payment =to you after
5 years
The rental is usualy slightly higher 6%+ return ( =cash flow
positive if possible)
with annual increases of at least 4%
You can have higher rents if they are fully
furnished.
I hope this helps.

Luch.R

------=_NextPart_000_014E_01C1C558.909592C0--

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