Buying freehold as investment for lease extension

Hassan424

Hi,

I have just been thinking of investing in freeholds for lease extension on houses, and I would be appreciate some sense check on my logic to see if it makes sense and whether it is feasible.

Scenario:
Buy the the freehold for a house for 5K which has 23 years left on the lease.
Then offer a lease extension to the current lease holder for say 30K for 99 years.
Then later on sell the freehold to someone else or to the lease holder. Walk away with approx 20-25K profit.

Does this idea make any sense? Does it have merit or is it too much of a hassle?

Thanks in advance

eddddy

Hassan424 wrote: »

Hi,

I have just been thinking of investing in freeholds for lease extension on houses, and I would be appreciate some sense check on my logic to see if it makes sense and whether it is feasible.

Scenario:
Buy the the freehold for a house for 5K which has 23 years left on the lease.
Then offer a lease extension to the current lease holder for say 30K for 99 years.
Then later on sell the freehold to someone else or to the lease holder. Walk away with approx 20-25K profit.

Does this idea make any sense? Does it have merit or is it too much of a hassle?

Thanks in advance

It's not really a question of hassle - perhaps it's more a question of logic.

Why would the current freeholder sell you the freehold for £5k, instead of selling the leaseholder a lease extension for £30k?


If you think you've seen a deal like that offered somewhere, I'd guess that you've misunderstood something.

Or if somebody really was a bit daft and selling something worth £30k for £5k, I suspect it would have been snapped up immediately.

Hassan424

eddddy wrote: »

It's not really a question of hassle - perhaps it's more a question of logic.

Why would the current freeholder sell you the freehold for £5k, instead of selling the leaseholder a lease extension for £30k?


If you think you've seen a deal like that offered somewhere, I'd guess that you've misunderstood something.

Or if somebody really was a bit daft and selling something worth £30k for £5k, I suspect it would have been snapped up immediately.

This is one of the adverts I have seen on rightmove:

rightmove.co.uk/commercial-property-for-sale/property-49042605.htm

Am i missing something fundamental here?
I read that as 6K with 36 years left on lease?

At the very least I was thinking if the leasee doesn't want to extend in 36 years I will have a freehold property to rent out for my retirement?

Regards