• Login:
Welcome, Register Here
follow PropertyTalk on facebook follow PropertyTalk on twitter Newsletter follow PropertyTalk on LinkedIn follow PropertyTalk on facebook
Results 1 to 4 of 4
  1. #1

    Default Lease Options/Assignment Coaching

    Is there anybody out there who would maybe consider coaching me through my first lease option and or assignment deal with payment being a 1/2 (or some other arrangment) share in the profits from that deal??? In the Hamilton area (or there abouts). Is there anyone else out there keen to break into this field but who keeps being told or reading "not for the faint hearted"??? Interested in this technique (not confident enough to attempt starting without some support) and keen to continue investing, issue being I have little income (at present) and almost 0 cash, do have a little equity in exsisting properties though and do have some time on my hands (at home with small child). Keen to hear other peoples thought's on this.

  2. #2
    Join Date
    Jun 2006
    Location
    Hutt City
    Posts
    1,305

    Default

    LOs and assignments are different kettles of fish. Assignments as I understand it are when you find a property, negotiate a low price, on-sell it to your buyer, and charge a finders fee. This is now illegal, unless you are a bone fide RE agent.
    Lease options where you buy a property and lease it to a potential buyer are possibly still OK as far as i know, although the tax advantages (gst) that used to exist are no longer available. The accountant costs to run a LO are extortionate, and the tenant-buyer really has little to gain in the current market with flat-lining house prices. You have to do a lot to make it worthwhile. and why bother? At some risk, (and cost) it gives you cashflow. However, if you buy low, why not just sell and pocket the profit (or renovate and sell). This probably puts more cash in your pocket without the slow trickle over a long LO period. I did a LO 4 years ago (Lower Hutt) and yes, it gave me cashflow, but the tenant buyer became slack with his rent and eventually left, forfeiting his option fees. The house requires a decent reno, and valuation is lower than when I bought it, (although, still above what I paid). I will try and lease this out again when I finish the reno, otherwise I will have to sell, and repay the gst. I wouldn't bother if I didn't have the gst in hand.

  3. #3

    Default

    Thanks for your thoughts Jumpin,

    I do realise that assignments and LO's are two different things, I had thought that an assignment could have been a "stepping stone" towards a LO. If I became a RE Agent could I then do assignments legally??? You don't really paint a very flattering picture for LO's!!! But then it almost seems a Taboo subject or Dreamers type of strategy and it is hard to come across anybody that is using these techinques successfully who is prepared to share their knowledge (an not charge an elaborate fee). I do not have the funds to purchase any property at the moment (or borrowing power) so that is why I am trying to look outside the box for ways to continue investing or to earn an income in real estate. You can do a "Sandwhich LO" where you don't actually buy the property, but LO it from the Owner and then further LO it to the tennent buyer. I would have thought it would be a great time for a tennant buyer to purchase a LO property, as they can lock in a purchase price at the current market rates and (my understanding), is that the "win" for them is that they can pocket the capital gain until end of the term when they purchse. Which if that were 3-5 years from now, should have hopefully increased. Also for somebody who cannot qualify for mainstream mortgages this could be a real step up the real estate ladder??

    Is anybody successfully using these techniques in todays market and would like to share your thoughts??

  4. #4
    Join Date
    Jun 2005
    Location
    Auckland
    Posts
    5,086

    Default

    The key word is 'hopefully' - LOs went through a bit of a boom in 06/07 as the market topped out and it became one of the ways investors sought to get extra cashflow. I doubt many of those tenant buyers are basking in their new found paper wealth yet.

    Fundamentally, there is nothing wrong (or illegal) with LOs or SLOs, but they do attract bad publicity from time to time when tenant buyers realise what 'non-refundable option fee' really means and complain to the press and anyone else who will listen.

    I think it takes a particular type of person to do an SLO - one who can say 'I'll pay you several thousand dollars less than your house is worth now in a few years time - its a win-win-win' with a straight face and mean it.

    Yes, there have been some success stories of people facing the abyss of bankcrupcy using a SLO to get their mortgage paid, but like I say, I think it takes a particular type of person to be able to pull it off.

    Jumpin - do you need a new accountant? Fees for our Trading Trust are not much different to the old LAQC (now LTC), and there is no reason for them to be so.
    DFTBA


 

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

Similar Threads

  1. Lease Assignment
    By tmouse in forum Commercial Property (NZ)
    Replies: 4
    Last Post: 21-09-2009, 04:19 PM
  2. Lease options
    By Paul34 in forum Property Investment (NZ)
    Replies: 14
    Last Post: 26-01-2009, 10:53 PM
  3. Lease Options
    By Clark Kent in forum Property Investment (NZ)
    Replies: 7
    Last Post: 22-09-2008, 06:13 PM
  4. 1 day Lease options course - $399?
    By Kre8eve in forum Property Investment (NZ)
    Replies: 23
    Last Post: 01-05-2008, 11:52 PM
  5. Lease Options and the RTA
    By SuperDad in forum Property Investment (NZ)
    Replies: 7
    Last Post: 18-05-2007, 08:44 AM
  6. Lease options Ch-Ch
    By Spider in forum Property Investment (NZ)
    Replies: 47
    Last Post: 21-02-2007, 10:15 AM
  7. Lease options & Sandwich Lease Options
    By Emblaze Pete in forum Property Investment (NZ)
    Replies: 9
    Last Post: 14-07-2006, 01:29 PM
  8. lease options which course
    By cantthinkofanickname in forum Property Investment (NZ)
    Replies: 11
    Last Post: 06-06-2006, 09:41 PM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •