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What are Lease Options?

Lease Options or EDC (Exchange with Delayed Completion) are creative ways to build a property portfolio without having to resort to mortgage finance.

A Lease Option is simply a long term lease agreement 6 -19 years where a monthly lease payment is made to the sellers mortgage lender or to the seller and where an option to buy or exchange contract allows for the eventual completion of the purchase, at a date within the agreement timescale, or earlier at the buyer’s discretion.

This can be a superb solution for vendors who have no wish to maintain their property commitment and need a long term sustainable solution.

The benefits to the investor are that they can rent the property for more that the underlying lease/mortgage payment that that need to make and they can fix the price for a long period of time usually 6 - 12 years, by which time house prices will be significantly higher than today. If they aren’t significantly high enough to warrant resal or completion of the option, the option can just be extended and the investor will continue to benefit from cashflow.

There is a wealth of information to be found at Tycoons Forum