The LARIBA Lease Purchase Model

The model is simple and straightforward. It consists of two parts:

The first is the return of capital. If the house price is $180,000, the client pays $60,000 and the balance is financed by LARIBA. In this case the client owns 33.4% of the house and LARIBA owns 66.6% of the house. The client agrees to buy back the share of LARIBA over a period of 5 years in monthly installments of $2,000 per month. The title of the house is transferred directly to the client to minimize costs and taxes. LARIBA becomes the lien holder. The client owns the house and handles his/her property in terms of maintenance, upkeep and renovation in the same way a traditional mortgage holder would.

The second part is the lease of the house. The client agrees to lease the house for a period of 60 months; the term of the pay back. The lease is estimated based on comparable lease rates of houses in the neighborhood and is negotiated on an ad-hoc basis between the client and LARIBA. The lease income is distributed between the client and LARIBA. The client's portion of the lease is used in our computer model to expedite the buy back process.