However, in recent years, its power has been harnessed in the world of residential property to great effect.
In a nutshell, it’s an agreement whereby the investor can take a lease of a property and then at the end of a predetermined term has an option to buy the property.
Throughout the term whereby the property is being leased, the investor has full control of the property and is able draw the same benefits as if they had bought the property.
The investor might choose to rent the property out, create a multi-let whereby the property is let by room, provide short let holiday accommodation, refurbish or simply sell on. The possibilities here are endless.
The beauty of this strategy lies within the control aspect rather than having to buy and own the property outright.
As the property is being controlled and has not been bought, none of the traditional hurdles are in the way. For example, to buy a 3-bedroom house in the South East, you are easily looking at needing a deposit of at least £75,000 if you were to purchase it on a buy-to-let basis. Not to forget, you would need to qualify for mortgage in the first place with the required income and pristine credit file. There are hundreds of reasons why you might not be able to get a mortgage, and this is the perfect strategy if you can’t.
Even if you do have the surplus cash and the facility to get a mortgage, it would be far more efficient to have your money work harder for you through this strategy, rather than being limited by how far you can stretch your funds.
By limiting your cash involvement and not owning the property, you also minimise your risk too!
So, if you are new to property or have an existing portfolio, a Lease Option can be a great strategy to maximise your earning potential from property.
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