L/O Question From Australia
G'day all,
Just joined the forum - great source of information!
Creative investing seems to be relatively new concept in Australia - hence there is limited information available at this stage.
I have read some of Robert Allens ebooks and Conti/Finkels ebooks which has really excited me.
I have one burning question though in relation to the "sandwich lease"
What proetction do you have to ensure that the seller (current owner) will continue to make mortgage payments with the lease money you are paying them? If they do not make payments and hte bank forecloses does they mean you (and your tennant buyer) are left high and dry?
Sorry if this is a basic question or not applicable in the USA.
Look forward to being part of the forum...
Cheers,
Battz
Battz,
Welcome aboard.
I am not a big fan of lease with option to purchase for either the owner or the tenant.
From the tenant's point of view, you put your finger on it--you do not have control over the property or over the property owner. Thus, the owner can encumber the property, or not be current in mortgage payments and then where are you? Yes, you can choose to not exercise your option to purchase the property, but then you forfeit the option fee and worse, you have "committed" time, effort and money to a property you thought you would purchase only to discover you have to bail out of possibility of owning it.
What I think makes better sense if you want to get an ownership interest in a property (and either take title or assign your interest to someone else) is just do a straight option to purchase with no lease if you want to "flip" to someone else and not take title, or do a purchase contract that will allow you to assign the contract to someone else and not take title, or a purchase contract and take title.
Thanks for your advice.
As I said Creative Investing seems to be in its infant stages here compared with you guys.
Positive cashflow is also a difficult concept as our property prices have skyrocketed (parts of Queensland have experienced over 50% in 12 months!) and rental yeild have suffered.
A $300,000 home may only bring $250 per week.
It is therefor necessary to look at our regional areas (100kms+ out of Capital cities) to achieve good returns.
I am in the position where I have a couple of investment properties but exhausted my own funds/equity so I am looking at "no money down" ideas. Lease Options just semed a interesting way.
Cheers,
Battz
Battz,
Just so you are aware, lease option is popular with many people here. I just can't understand why given the disadvantages to both tenant/optionee and property owner.