Lease Options

From: DB Bear


Who knows anything about Lease Options? How do they work? What's in it for me? What's in it for them?

DB_Bear
 
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Reply: 1
From: E L


Andrew Gray where are you???
Check out www.creativerealestateinvesting.com.au

Cheers
EL
 
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Reply: 1.1
From: Paul Zagoridis


And also search the archive for LEASE and OPTION. Lots of good stuff in there.

Also you can ready John Burley's book for a god summary (can't remember which chapter covers it). You can also check out John's web site (especially the forum there). www.johnburley.com

If you have a specific question I'd be happy to answer it.

Paul Zag
Dreamspinner
The Oz Film Biz site is archived at...
http://wealthesteem.dyndns.org/
 
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Reply: 1.1.1
From: Boyler Room


DB,

Depends which side of the fence you're on. Are you talking about purchasing via lease option or selling via lease option?? Totally different scenarios.

I'm pretty sure I've run over a bunch of stuff in previous posts re: Lease options but I'll quickly jot down a few benefits for both sides:

Selling:-

• Increase your purchase price
• Positive Cashflow
• Widen your market or appeal to a specific market that wouldn't have been able to purchase b4
• Cash upfront (usually a few $k)
• Win/Win situation

Buyer:-

• No Bank Qualifying
• Ability to purchase a property that was formerly out of reach
• Minimal "Deposit"
• Possibility of instant cap. growth on transfer/settlement
• Develop a savings record
• Gives time to clear bad credit rating


How does it work?
Simply a lease with an option to purchase the property attached.
Generally the purchaser will pay a premium on the market rent for the privilege of owning their own home (If you're selling). You decide an agreed price at the beginning of the contract and over the duration of the contract a portion of their rental payments is put toward the purchase price, effectively bringing it down of time. So if the purchase price was $100k at the beginning of the contract, and they're paying $100/wk, and $20 is going toward the purchase price, after 5 years they will have reduced the price by $5200. ($20 x 52 weeks x 5 years = $5200)

If you're buying however, you have the ability to reduce your rental payments by offering to take some of their expenses out of the rental equation. You might offer to pay their rates, maintenance etc etc and get them to lower their rental payments to suit you. You may offer a higher purchase price to get the quick sale or help them make the decision, but since you're making the rules it's simply a matter of weighing up what you think will work best for them and then presenting it to your potential vendor/landlord.

Hope this has been of some use to you.

Any further questions, don't hesitate to ask... you know where to find me ;-)

Boyler Room
Co Ordinator for ADL Freestylers
 
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