financing secrets of a millionaire real estate investor.pdf

102 FINANCING SECRETS OF A MILLIONAIRE REAL ESTATE INVESTOR
As seen in the following examples, an option can be used to gain
control of a property without actually owning it:
• A speculator who is aware of a proposed development can
obtain options on farmland and then sell the options to developers.
• To take advantage of appreciation in a hot real estate market,
an investor can use a long-term option to purchase property.
• To induce timely rental payments, a landlord can offer the tenant
an option to purchase.
There are literally hundreds of ways that an option can be structured,
and every detail is open for negotiation between the optionor
(seller) and optionee (buyer).
An Option Can Be Sold or Exercised
An option, like a real estate purchase agreement, is a personal
right that is assignable. If you were able to obtain an option to purchase
at favorable terms, you could sell your option. The assignee of
the option would then stand in your shoes, having the same right to
exercise the option to purchase the property. As with a lease, an
option is freely assignable absent an express provision in the option
agreement to the contrary.
Alternative to Selling Your Option
Rather than sell your option to purchase, you may wish to exercise
the option yourself, then sell the property to a third-party buyer
in a double closing, as described in Chapter 5.