• Property lease options – A case study

    Property Lease Options – how it works in practice

    Property lease options are a great property investment strategy, and could be a lifeline for owners unable to sell their property or meet their mortgage repayments, who are facing repossession or in negative equity.

    We recently worked with a young couple in Hayes, Middlesex, who bought house together. Unfortunately, three and half years later they decided to go their separate ways as often happens with relationships. In this case, they also had a young child. The couple no longer wanted to live under the same roof which was understandable, and were desperate to move on and have separate lives. However, they were unable to do so because they had to pay the mortgage on the property and neither of them could afford to take over the repayments by themselves. Therefore they decided to sell the property.

    When we met the couple, the property had been on the market for 18 months, and for various reasons they were unable to secure a buyer. They could not drop price any further as offers were below the outstanding mortgage and it would have left them with a shortfall.  They didn’t want to rent the place out to tenants, as they didn’t want to face the headache of managing the tenants and the associated liability

    They saw my leaflet posted through their letterbox and got in touch about their situation. I explained how I could provide a solution using a property lease option to enable them to move on with their lives. We agreed that I would babysit their mortgage for up to 21 years and exercise my option to buy it anytime within that period.

    With this arrangement, at the end of the option term they will receive £5000 each. Without using a property lease option strategy, they would have been stuck together in the house, faced repossession or had to voluntarily hand in the keys to the detriment of their credit rating. Alternatively they would be forced to accept an offer below their outstanding mortgage value and have to make up the difference themselves between the sale price and outstanding mortgage.

    By using the property lease option, it was a WIN:WIN for all parties involved, giving them the peace of mind that they no longer needed to worry about paying the mortgage or managing the sale of the house and they could happily move on with their lives knowing I am taking care of their house, mortgage payments and any other costs associated with the property.

    If you would like to find out more about property lease options or other strategies including property instalment contracts, delayed completion, avoiding repossession, negative equity or unable to meet mortgage repayments get in touch with Reena.

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    About Reena Malra

    Connect with me: Google+ Reena Malra is one of the UKs most successful property investors and mentors. The strategies Reena has discovered and developed over the past few years take the focus off the price and put it on the flexible and convenient payment terms. This is how Reena can structure transactions to really benefit both the buyer and the seller. Reena specialises in property lease options, instalment contracts, rent torent, below market value (BMV), stopping repossessions, joint venture, delayed completion and tenant buyer strategies. She also runsworkshops and webinars, and offers property consultancy services and one-to-one mentoring.

    View all posts by Reena Malra

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