Hi Xenia
Lease options are normally done with an interest only loan. If you are worried about falling house prices then use a P&I loan. This way at least you are paying some principle. This would bump up the repayments to the buyer but also gives them more equity build.
You can also off set any drop by getting a bigger option payment at the beginning. This way when the time comes to buy you out the house would be cheaper to your buyers. The option payment normally comes off the total price of the house, but non-refundable if they break the agreement. The negative side to this suggestion is you would limit your target area as most people do not have a big deposit.
Another way to approach the problem if your fears were realized and prices did drop would be to offer your buyer a second mortgage carry back on the short fall until prices rose again. This would be fine with the lenders as the buyer still would have X amount of equity already and with a small second mortgage from you the problem would be solved.
Lease options are very flexible it really is your deal in the end.

Kerwyn.

Hi Jaradnkaren
To do the second scenario you have to do a number of things.
First approach a lender and tell them what you have in mind and see if they will give you pre-approval on what you are going to do.
Secondly ask the lender what valuer they use then have a chat with them to see if you do Y to the property it will be worth X.
Now the critical part to doing this is to make sure you can get a long settlement, you will need it. Also to make sure you have your costing correct.

Have you thought about asking for a second mortgage carry back with the vendor? If they will give you a 10% second mortgage even if it is only for 1 year you will have enough time to get the place fixed up and revalued. You then pay the second mortgage out and the place is yours. Sometimes they will do this especially if you refrain from low balling them and offer close to the asking price or even a few thousand more. If you are sure you can add a lot of value to the place it is a good way of getting what you want by giving the vendor what they want.
Kerwyn

Hi All
I tend to agree with Westan as far as the word retirement goes. I remember reading an article on retirement a few years back that reported than a big majority of people who retired to the so called easy life lasted around 2 to 5 years before popping of this mortal coil.
Now; that is not something I want to do for awhile so I have exactly 0% interest in retirement.
That doesn’t mean I want to keep working in a normal job or run a small business to make a living: I can think of much better things to do. What it does mean is that you have to do things you like to do and earn good money at the same time. If your job is making you stressed out and ill, then find something you like to do.
It is not going to be easy, but show me something that is worth anything and is easy, chances are you will not find it. There is an old saying ‘something you get for nothing is worth exactly what you paid for it’: nothing.

I am 55 and came to this conclusion only lately, so I am doing something about it now.
How much do you need to have in dollars to feel satisfied? Well I would like around 1 to 2 million passive income a year. That’s the goal I am aiming at and I will just have to see what transpires down the track.
Most of you guys are starting a lot younger than me so you can spare yourself a lot of hard work doing something you hate just to survive.
You just have to drop the word retirement from your vocabulary and think of it as a change in life direction instead.
Kerwyn.

Hi Jaradnkaren
A couple of things you can consider? Is there libel to be good capital growth in the property over the next few years? If there is then you can look for a money partner to come in with you.
Secondly is there room for adding value to the property in the short term? If there is why not offer a longer settlement period and value add to the place, paint, landscape, fix it up. Then get it revalued before settlement and use the extra as more deposit: could make all the difference to the lenders giving you a loan.
Kerwyn.

Hi Don and Liz
Yep. a lot of presenters do offer you money back. I have been to one seminar where you could get your money back Sunday lunch time if you thought it was a scam. That meant you had a day and a half free if you wanted, not bad from someone who just wanted to rip you off.

Kerwyn

Hi All

Yet again you fail to understand that a fall in house prices is a positive thing for many Australians. It allows struggling FHBs into the market, and makes it much more affordable for existing home owners to trade up.

dmichie you are forgetting one thing? If the economy goes bad these same poor FHBs are going to be on the wrong end of the stick again. The banks will simply withdraw their lending and make it harder to get a loan, so FHBs will be behind the 8 ball again. To counter this the price of housing would have to fall far lower than 10%.
Kerwyn.

Hi Sean
Try Aspire on 1300 132 941 they will know of anyone doing L/O in Perth.
Kerwyn