Done correctly, the lease option agreement can give you a tremendous amount of flexibility as well as multiple streams of income. One of the most beautiful aspects of the lease option is that you can purchase a property under the terms of the lease option from a motivated seller and then turn around and sub-lease the property to another party. When you sign a lease option agreement with a motivated seller, they're going to want you to give them an option consideration. Some people may call it a down payment. In addition to this amount, you'll also be agreeing to make monthly payments to the property owner for a predetermined period of time, such as seven years. If you fail to exercise your option to purchase the property within that period of time, you'll lose the money you gave them as an option payment.

There are three exciting profit centres when dealing with a lease option. When you sub-lease the property to a tenant buyer, you'll collect a deposit from them at the time that they sign a contract. Depending on market conditions and their ability to pay, you can generally collect option consideration amount of £3,000-£5,000. This is an excellent way of immediately getting back any money you may have given to the original seller of the property when you signed your contract with them.

In addition to option, the second profit centre you have with a lucrative lease option agreement is the spread - the amount between your mortgage payment amount and your tenant's rent. This amount could be as little as £100 per month or as much as several hundred, depending upon the details you work out with your optionee. The final profit centre is the one with the greatest potential for massive profit. This is also a spread amount, but in this case is the difference between what you agreed to pay the seller of the property and the amount that you have agreed to sell the property for. For instance, if your option agreement with the seller of the property gives you the right to purchase the property for £100,000 and you have agreed to sell it for £130,000, the difference is £30,000. When the transaction is closed, you will realize a £30,000 profit. There are ways to sweeten the pot by offering a £5,000-£10,000 discount for exercising the right to purchase the property very early in the agreement.

As you can see very clearly, three profit centres make it a good way to receive a large influx of cash when you initially sign the agreement, as well as an ongoing stream of positive monthly income during the rental phase of the contract, with a huge bonus paid to you when the option is exercised. When those three streams of income converge, the potential could be a river of cash flowing into your bank account.

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