Property Lease Options
Lease options are slightly different than renting and are geared to people
wanting to own their own home but are unable to get finance through a bank. This
option allows people to lease the property with the intention that they get to
purchase it at a later date.
For example let’s say a property is worth $200,000 and its expected weekly
rental is $200 per week. You advertised
for a rent and buy scenario and had many queries. You manage to select an
applicant who has enough money to make the weekly repayments but doesn’t have
enough deposit to qualify for a home loan.
So you charge a bit more for a weekly lease. This will need to be calculated on
your expenses and costs and how much people would be prepared to pay. For this
example let’s say you charge $250 per week. Also the lease will pay for the land
rates and fixes to the house. Before you pass on the charges make sure it’s
legal in your state. Some prohibit this and hence you would need to cover it in
your weekly charge.
Next there is a call option on the lease, which allows (but doesn’t force) the
lease to purchase the property at a later date for an agreed future price. This
can be either taken up or the lease can be terminated.
Some things to consider here is making sure you pick the right people. Make sure
they can afford the weekly repayments. Also make sure the house you purchase is
good enough to stand the test of time. If the property starts falling down and
the leasee is required to fix major structural work, they will mostly pickup and
leave.