Loan for the full appraised value in order to exercise a lease purchase option

[Clayton Bradley]

Hello all,

My apologies for the long title of this post. Hopefully I can explain it in a way that makes sense. My partners and I are currently sub-leasing a property that we have on a 4-year lease term. The lease includes an option to purchase at any time during the term of the lease, for a pre-determined purchase price. When we initially leased the property it was unlivable and we did a full rehab. For that reason, the owner listed the purchase price at 120k. Now, the property is easily worth over 200k after the work we put into it. 

With that being said, we are trying to game-plan a way to access that $80,000+ of equity we have built into the property. The obvious answer seems to involve getting a loan for 120k and exercising the purchase option at the listed purchase price, then doing a cash out refinance once the property has reached the lender's seasoning requirements. I'm wondering if anyone has been in a similar situation, and if there is any quicker way to purchase the property and access this equity. Would it be possible to get a conventional mortgage for close to the current appraised value (200k or so), exercise the purchase option, then bank the remaining cash? I haven't spoken to a lender yet that sees this as a possibility, but we are hoping to accelerate the process, access this equity, and put it into another project. Hopefully without having to wait a 6 month seasoning period and paying two sets of closing costs.

Looking forward to hearing what you all have to say! Please let me know if any part of this was unclear.