Lease-Option and Your Equity

Hi Guys,

Just been reading Tony Barton’s lease-option strategy in 0-130. In the passage, he says that once the contract is underway, clients perform cosmetic improvements on the ppty at their own cost – to beautify their future ppty. He then says “I’m able to borrow against the additional equity they are contributing to the ppty and then use that money to buy more IP’s” –

My question is this –

My understanding is that he uses the additional equity beyond the agreed option sale price to fund more purchases. If banks lend him money over this increased equity, won’t they want the ppty as security? If so, isn’t it possible that they might demand he sell the ppty to recoup losses should he default? And if so, where do the lease-option clients stand given that they have entered into a legally binding lease-option contract?

Thanks in advance people!

Fish