I have been looking into lease options in the USA. It appears to be very common practice there. However, I recently heard that it can be a very productive strategy here in Australia. Has anyone got any ideas where I could get solid info about the strategy in Australia? O r had any experience?
Cheers.
This topic was modified 9 years, 1 month ago by Argyle.
In the US it is common to use lease options using little or no funds of your own – especially with sandwich leases. Are arrangements like these used in Australia. If so, how does one go about setting them up?
you seem quite knowledgeable with lease options / instalment contracts. i was wondering how you advertised for tenant buyers?
also as you do most of your deals in qld (i think) do you prefer one over the other? etc do you prefer doing instalment contracts compared to lease options? and if so how come?
I agree with Richard, lease options (also known as ‘Rent-to-own’) are common here in Aus and if done right, they can (and should be!) a win-win to both parties.
how you advertised for tenant buyers?
do you prefer doing instalment contracts compared to lease options? and if so how come?
I’m not Richard but thought you might like also my 2c? :-)
You can advertise in many ways, offline and online, I guess it depends more on the ways you’re most comfortable with?
Within the Vendor Finance options, lease options are the best for the vendor as s/he gets to keep the title until the buyer/tenant pays the entire sum (usually by using a bank down the line) where as in instalments, the buyer holds the title and the vendor only has first (or second…) mortgage.
Selling properties using lease options is a great way to balance out your property portfolio, especially if you have negative geared properties as well. By including positive cash flow strategies you can even out the shortfalls of the capital growth properties and basically have your cake and eat it too.
Properly formattted paperwork with correct terminology is vital as there is a lot of consumer attention around lease options and vendor finance in general. It also needs to have a properly formatted contract of sale attached to your lease option or it will not conform and leave you open to possible litigation.
Advertising the property you have sale can be done online and there are a number of avenues such as http://www.buywithoutabank.com.au and http://www.renttoown.com.au. You can pay for packages on realestate.com.au and domain.com.au through various agents. Using local papers and signs are a good way to attract the attention of people in your local area.
Finding the client is the easy step, qualifying your client properly is the tricky one. You need to ensure that you have properly qualified client and ensure they can afford the property, as well as be in a position where they can be reasonably expected to achieve a bank loan to purchase the property before the end of the option period.
Things like setting the price upfront and structuring the payment correctly – then wording that in your lease option contract is extremely important and the wording you use will either make or break the transaction if it goes south.
As I said earlier selling houses on lease options is a great strategy for creating cash flow for balance in your property portfolio to help you achieve your goals in a shorter period of time.