All Topics / Creative Investing / Lease to Buy question

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  • Profile photo of J-louJ-lou
    Member
    @j-lou
    Join Date: 2008
    Post Count: 26

    Hello,

    I had an interesting thought last night and wondered if anyone knew the answer –

    There is a house I am intersted in buying, but can't afford atm.  The seller is getting a bit desperate and has dropped the price a few times already – I know they need to sell.

    Hypothetically, if it suited the seller, if I was to enter a lease to buy arrangement, could I renovate the property, rent it out at a higher rent than i pay to a tenent and then excersise the option in a couple of years?

    Thanks!

    Jess

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Yep. You just have to put a condition in the lease that allows you to sub-lease it out.

    Also need to be careful if you cannot settle or sell the option you may lose all the improvements you have added.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of J-louJ-lou
    Member
    @j-lou
    Join Date: 2008
    Post Count: 26

    Okay.  Thanks for your response!

    Profile photo of Ryan McLeanRyan McLean
    Participant
    @ryan-mclean
    Join Date: 2010
    Post Count: 547

    This is a very clever idea and one I have never thought of. It is a way to get some positive cash flow, without the huge outlet of an immediate deposit or a huge loan from the bank. You could use your positive cash flow to help save your deposit so you don’t have to borrow as much from the bank, and hopefully in those couple of year the property goes up in value so the lenders will like you even more.

    The only problem is finding a vendor who is desperate enough to do it!

    Ryan McLean
    http://CashFlowInvestor.com.au
    Positive Cash Flow Properties Are Just A Click Away

    Ryan McLean | On Property
    http://onproperty.com.au
    Email Me

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