Lease options in short are a way to purchase property with little or no money.

Traditionally, if you buy a property, you have to put a deposit down - with lease options you can pay a nominal sum (i.e. £1 or $1) to purchase a property. In some circumstances, he may owe more money to his mortgage company than his house is worth and therefore be prepared to pay you a few thousand pounds to buy it!

You’re probably thinking - how is this possible and is it legal? It’s totally legal and most commercial solicitors can put these transactions together.

Lease options are very common in countries such as the USA and Australia and are slowly becoming more and more popular in the UK. The secret of doing lease option deals is primarily finding motivated sellers.

Motivated sellers are those that need to sell their property urgently and are happy to accept a discount on its sale price. Motivated sellers are usually motivated to sell for several reasons such as separation and or divorce, debt problems, emigration and relocation etc.

The lease option is a strategy that allows investors to lease a home from a seller and have the right to buy it at a pre-agreed price in the future. The time in which the investor can buy the property is determined by the length of the lease.

So for example, an investor may agree to lease property on a 5 year term for £100,000. The property is worth around £115,000. During this the investor agrees to pay the seller £400 per calendar month. The seller and investor can also agree rent credits which will come off the purchase price at the end of the term i.e. £100 pound from each monthly payment comes off the purchase price. So £1200 would come off the purchase price every year. The property can be purchased at any time during the lease term. In the above example, if the property was purchased early and after three years, the investor would pay £111,400 (£115,000 purchase price less £3,600 in rent credits)

In short, a lease option allows an investor to take control of a property today and buy it during a said given time and a pre-agreed price without getting a mortgage and without a large sum of money.

The investor can rent out the property, split the property in to separate flats, build another house on the land (subject to planning permission) or simply sell his ‘option’ to another individual at a higher value than he has agreed with the original seller.

To find out how you can learn the secrets of investing in property without money, mortgages and risk, visit www.leaseoptionprofits.co.uk.

    Posted in Investing from Investor on 12. Jun. 2010