Batts, I think I am more of a novice than you are, and I am confused, too, when it comes to lease-options.

I am asking questions because I am mainly puzzled about the ambiguity/ethicality of using a lease option.
What I mean, for example, is:
How can the option seller (writer) say:
“The tenant should be made responsible for maintenance, rates and insurance etc because this property may be in his possession (one day)”, while on the other hand the option seller can say: “The title is still in MY name, so I can draw the equity, claim depreciation.” (Even on improvements the tenants might have made and paid for???)

Dr X, I am glad that the tenants at least can protect themselves by placing a caveat on the property. I think they will be able to sleep better!
You actually brought up one of my other concerns in your other post about lease-optioning in a down market. Saves me a question on here )

Yidn Shalom,
You said:”…all in exchange for an affordable and desirable property they may own at their leisure…”
My concern was about the word “may”.
If the option buyers are not able to own a property under conventional means, doesn’t that mean that the risk for the option buyer is big- e.g. how do you make sure they are taking a managable risk. If you are not a financial advisor, would you have to arrange to sit down with the option buyer and a financial adviser to look at the risk-rate?

Paul,
Thanks for the very useful info on the idea of: “…writing maintenance, etc responsibilities into the option document, in an effort to try to get around a landlords responsibilities under the Residential Tenancies Act…”

you said: “…just estimate your maintenance, rates and insurance costs per week and add it to the rent. It not perfect but it is legal “

I agree; it is not perfect!

I am aware that I sound like a lease-option rookie, but I am still struggling to understand the ethicality and ambiguity of using either wrapping or lease-optioning as investment tools.

Celivia

I am pretty sure there are all kinds of tricks or loops that will enable you to make the tenant responsible for all the repairs/maintenance of the property.

But really, even if you use the standard tenancy agreement to stay out of trouble with the law, but outside the agreement make it the responsibility of the ‘option holder’ instead of the tenant for the upkeep of the property, I still think that you, the owner, remains (and so you should be) responsible for the upkeep of YOUR property.
E.g. the roof needs repairing and before the tenant gets around to it, it blows off, and oh btw the tenant also didn’t get around to paying insurance. What a mess!

Isn’t that why the tenant (who remains a tenant and not just an option holder) is paying rent- to not have to worry about things like maintenance? Am I missing something?[blink]

I just don’t see the win/win here: tenant pays a premium plus extra credits on top of the rent every week, all of which you can keep if the tenant is not able to exercise the option on the expiry date; the tenant, even though he/she’s paying rent plus weekly credits is responsible for the maintenance, rates etc; you (not the tenant) can draw out the tenant’s equity to use as you please while the tenant does not have a guarantee that the equity still exists on the expiry date. [ohno]

Would you inform the tenant/option holder that you are planning to use his/her equity before any agreements are signed?

Celivia

I’m going to watch what happens, B04 [wink]

Celivia

There was some discussion too about a drop in quality of properties for sale in NSW after the abolishment of vendor duty.

It was speculated that investors won’t hesitate to get rid of their crappiest investment properties which they had been reluctantly holding because of the cost of vendor duty.

I think this might not be a big problem at all because the vendor duty was only introduced about a year or so ago.

Does anybody have other thoughts about this?

Celivia

She’s so cute and adorable, Richmond!

CONGRATULATIONS!!!

Celivia

Awww Shelley, that’s a long period of vacancy. Your apartment sounds really nice.

I strongly agree with voigtstr that placing ads in the (local and surrounding areas) newspaper is a must. Both times, my tenants reacted to the ad in the paper, not to the ad on the internet or agency’s window.

Are the other units in the block also being looked after by your property manager?
Have you found out how much the rent is for the other units in the same block?

Has there been any interest at all, have some people looked at the apartment?

If there hasn’t been any interest, perhaps I would sit down with the property manager to openly discuss why they think the apartment has has been ignored so far. He/she should have suggestions to help.

If people have inspected it but after seeing it have lost interest, what reasons have they given for not wanting to rent it? (Hehe maybe they did’t like the dvd player).

But… whatever the reason for this longish vacancy is, it is important to find out exactly what that reason is so that you can fix that problem.

I really hope you find a good tenant soon, Shelley!

Celivia

“Most of these people can not buy a house. They have bad credit, bankruptcy, Divorce, self employed etc. You may be the only one willing to give them a chance to own a home.”

Great to see such good samaritans on this forum.

But…I wonder what will happen to these desperate people if they won’t be able to close the deal… this will probably be the ONLY chance they’ll ever have to own a property.

DO you just say: “Don’t worry, I’ve made MY money?”
What happens to that win/win ideal now?

So the option holders will lose their initial ‘option consideration’ or premium, as others call it, because it is non-refundable money.
But what about these extra payments every week/month they hand in towards their purchase. Is this refundable money or will they lose these credits as well?

Celivia

I’m curious, too!
I (almost always) have my doubts about these expensive workshops.[baaa]

Another person who has ‘made it’ from rags to riches through learning from her own mistakes etc. etc. Now has millons of dollars worth of property- blah blah, I’ve heard it all.[sleepy]

Of course, it is great that she has ‘made it’ and learned from her own mistakes.
But then she has to turn herself into some property guru. Nothing new.[sleepy2]

Anyway, considering she has lots to offer (so she says) during the 2 days of her workshop, and considering that the workshop costs $3000, you would expect that after the workshop you’d know where to go, what to do, how to go on from there.

But no, she is not very confident that people get enough out of her workshop and the copy of her book (only available at her workshops). [tired]

That’s why she offers people who subscribe after her workshop mentoring on a personal basis (I wonder how much this extra support will cost those people who have already handed out $3000 or would this be included in the price they pay for the workshop??? [biggrin]).
Hhhmmmmmmm….

Celivia

Hehe Kerwyn, I DO love to bag some of the guru’s, that’s why it’s such a shame that I have nothing to add, all of you have said it for me.

Just want to add this, for fun:
Marge: “Homer, it’s so easy to criticise…”
Homer: “Yeah and a lot of fun, too!”

Celivia

Yes, fun![upsidedown]

We can all let our mice do the ‘groundwork’.

Celivia