Double Closing on a Lease Option Contract

[Kunaal Kumar]

Hello! I have the potential to lock down a luxury property in LA using a 3 year lease option contract. I have a business partner who wants to rent the propert personally, so I don’t have to worry about the monthly expenses during the hold period. 

I think there’s a massive equity spread here. The option strike price would be around $400k below “market value” based on comps I pulled that sold back when rates were around 7%. My thesis is that rates will definitely be below 7% in 3 years, and it’s in a great neighborhood in LA so I think the long term fundamentals are there.

When I exercise the option, I have the capacity to raise money for the down payment, but I’d prefer not to if possible. I run a debt fund that generates 20% on RE debt, so if I’m raising money I’d much prefer to direct my investors there instead.

Therefore, my question is the following: is it possible to double close on the option contract? That way, I wouldn’t have to raise the funds to close on the property first before selling it, and I’d just be able to directly capture the equity spread.

And if not, are there any other ways to do this? I can imagine that I could assign the contract to another buyer, but ideally I'd want to list this property on the MLS and sell to an end buyer instead of an investor, so I'd imagine that double closing is the way to go.

Any help would be greatly appreciated!