There are a number of different ways to find lease option deals, and here we will focus on some of the best ones.
As we’ve detailed elsewhere, lease options can be one of the quickest ways to get into the property business, with no real barriers to entry and no huge upfront lump sum required.
With lease options you can benefit from the increase in equity of a property you don’t own, and also, with the right strategy, make money hand over fist with monthly cashflow.
Lease options, also known as purchase lease options, allow you to rent someone’s property for a fixed number of years and then either buy the property at a pre-agreed price or hand it back to the owner. There is no obligation to complete a purchase – hence ‘options’.
It is a strategy that has been commonly used in the world of commercial property for, literally, hundreds of years but is still pretty niche in residential property investment. So, you can use your specialist knowledge in this field to your undoubted advantage.
So how do I go about finding one of those lease options? That was the question you were just about to ask, right?
Well, you can ask your local estate agents. They might not all be too knowledgeable about the strategy but you can help them with that.
A quick check on Rightmove (and other online property portals) should also throw up a few decent possibilities.
Keep an eye on the entries that say ‘For Sale Or Rent’ (King of the Road style). This indicates that they are in no hurry to sell the property – they are not motivated or desperate sellers.
They would ideally like to sell it, but if that’s not happening they are open to any alternatives that will help with their cashflow.
These are the kind of owners and agents you want to approach. With lease options, you’ll rent now with a possibility that you will buy later.
If it’s regular cash the owner needs rather than an immediate lump sum to help them move on with their lives, they will be interested in talking to you.
Another potential source for your lease option deals could be landlords who are keen to offload their portfolios, whether down to their age or the fact they no longer want to be in the property business, for whatever reason.
Most of these tired landlords will have a higher level of knowledge or sophistication with regard to the property business than your average seller.
They may even be aware of lease options (they may have done a few themselves) so you can skip a few steps when you engage with them.
The ones that have had enough of managing their properties hands-on will jump at the chance of guaranteed rental income for, say, 5-7 years.
If this is indeed the case, you can offer them just that, or similar, but add in an option to buy their property within that timescale. Most will be interested – you are potentially solving two of their problems at a stroke (managing their properties and selling their properties). All good.
At this point it will come down to terms, so you negotiate in good faith on order to reach an agreement that works for all parties. And, there you have it – a purchase lease option.
Distant (especially overseas) landlords are a group who would really go for this, especially if they have grown bored with trying to control their portfolios all by themselves or using poor-quality local agents who may, at the very least, cut corners or, in some worst-case scenarios, rip them off. When the cat’s away and all that?
You can be the answer to the portfolio landlord’s prayers, so go out there and start doing good.