financing secrets of a millionaire real estate investor.pdf

8/The Lease Option 103
Famous Option Story
The most infamous option financing story is how
the United Nations found its way to New York City.
In the mid-1940s, William Zeckendorf, a now infamous
developer, took options on multiple waterfront
lots on the east side of Manhattan. At the
time, the properties were primarily being used for
slaughterhouses. Zeckendorf’s option price for the
lots was $6.5 million. With the help of the Rockefeller
family, the United Nations purchased the
property from Zeckendorf for $8.5 million.
The Lease Option
A lease option is really two transactions: a lease and an option to
purchase. Under a lease, a tenant may have the option to buy the property.
The option itself can be structured in various ways. For example,
the option may be that of a right of first refusal in the event the landlord
intends to sell the property. The option may also be an exclusive
option for the tenant to buy at a certain price. When combined with
a lease, a purchase option may also include rent credits, that is, an
agreement that part of the monthly rent payments will be applied to
reduce the purchase price of the property. There are literally hundreds
of ways that an option or lease option can be structured, and
every detail is open for negotiation between the landlord and tenant.
The Lease Purchase
The lease purchase, like a lease option, is two transactions: a
lease and a purchase agreement. A regular purchase contract is a bind-