Hi! Just wondering the pro/cons of the 2 strategies. Seems to me very similar, except that with a L/O you may or may not sell the property at the end of the lease, which is not a disadvantage in most cases anyway.
Both strategies involve an upfront deposit from the tenant/buyer & an ongoing positive cashflow. Why would one choose a strategy over the other? Hope you folks can share your thoughts & generate some debate on this one.
One other thing- what’s the downside of a wrap to the “wrappee”? I read in some Australian government site that if the “wrapper” falls back on his payments & gets foreclosed, the “wrappee” would be left without his house. Any thoughts on this? Cheers!
Hi,
I think the biggest distinction with the strategies is that you can qualify for the FHOG with a wrap but not a lease-option.
I regard both strategies as very useful tools that have slightly different application depending on the exit strategy of the investor and the needs of the client.
For example, for clients that do not qualify for the FHOG – a possible win-win outcome may be to lease-option a property to them. Provided they can save the deposit and they show a reliable payment history – you might like to wrap them the property when the option arises (if they can’t get finance elsewhere).
Regards,
Steve McKnight
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
How does the FHOG come into play? If you’re talking about the deposit involved, I assume that you’d want a larger deposit when you’re wrapping the property to someone, so the FHOG helps?
Also why can’t the tenant get a FHOG with a lease option? Can’t he just apply for it when he decides to exercise the option to buy? Cheers!
Is it possible to get FHOG in Qld for a wrap.
I was told that it wasn’t but the information may
be incorrect.I believe it is…..check out the forum FHOG in the general discussion.
ADHi,
Under a wrap you can get the FHOG:
* Day 1 in Vic. and NSW
* After 1 year in Tas. and QldUnder a lease option you have to wait until there is a contract for sale, which you rightly point out, will be when they exercise their option.
Bye,
Steve McKnight
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
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