How would you like to be paid 3 times on the same offer? If you want the right to buy a property or even vacant land at some point in the future, but pay the price you determine today, you should seriously consider using the pure option. The option agreement is really a very simple document that spells out the terms under which you could purchase a property. The beauty of choice is that you can decide today how much you’re willing to pay for a property without having to pay for it or even decide if you want it for a period of time, sometimes years in the future.

Let me give you a good example of how you might use an option. Imagine for a moment that you have heard a rumor that an exciting new development may be coming to a specific area. While it’s far from certain whether or not it will actually happen, if it does, property values ​​in that area will skyrocket. Wouldn’t it be great if you could secure the opportunity to take advantage of future property value appreciations and pay today’s prices tomorrow? With an optional contract you can.

The key to making this technique work is locating homeowners who may be undecided about whether or not they’re really interested in selling. Another way to use this great opportunity is to locate properties that you may or may not be really interested in buying. If you can locate a seller who is truly motivated to sell his property, but doesn’t have the cash to close the deal, you can offer him anywhere from $10 to $1,000 for the right to buy his property at any time of his choosing. . two-year term at a price you determine today.

You may have a hard time convincing a savvy homeowner to give you the right to set a future selling price today, but it happens with amazing regularity. You may be surprised to learn this, but many more owners than you might imagine would be willing to almost give you the right to buy their property. However, the law stipulates that there must be a consideration, and in most cases that consideration is in cash.

However, don’t rule out the possibility that a motivated seller may be willing to give you an option on your property in exchange for something you don’t need anyway. That’s why it’s always a good idea to listen closely and carefully to what people are telling you when you’re involved in conversations with them about your property. Just by listening, you can learn a lot. So keep your ears open and get ready to think outside the box!

The pure option is not the most exciting investment tool under the sun, but when you combine it with a lease/rental agreement, you have one of the most beautiful financial instruments and wealth building tools in the universe. Done correctly, a lease option agreement can provide you with a tremendous amount of flexibility as well as multiple streams of income. The key here is to keep the option agreement and the lease/rental agreement as separate documents. I’ll explain why in just a minute. One of the most beautiful aspects of the lease option agreement is that you can buy a property under the terms of the lease option agreement from a motivated seller and then turn around and sublet the property to someone else. When you sign a lease option agreement with a motivated seller, you’ll want them to give you an option consideration. Some people may call it a down payment, but the actual legal terminology is “option consideration.” In addition to this amount, you will also agree to make monthly payments to the property owner over a predetermined period of time, such as two years. If you don’t exercise your option to purchase the property within that time period, you will lose the money you gave them as option consideration.

There are three interesting profit centers when it comes to a leasing option. When you sublease the property to another party, you will collect option consideration from them at the time they sign a contract. Depending on market conditions and your ability to pay, you can typically collect an option consideration amount of $3,000-$5,000. This is a great way to immediately get back any money you gave the original seller of the property when you signed the contract with them.

In addition to option consideration, the second profit center you have with a lucrative lease option agreement is the spread: the amount between your lease payment amount and your tenant’s. This amount could be as little as $100 per month or as much as several hundred dollars, depending on the details you work out with your option. The final profit center is the one with the greatest potential for massive profit. This is also a differential amount, but in this case it is the difference between what you agreed to pay the seller of the property and the amount you agreed to sell the property for. For example, if your option agreement with the seller of the property entitles you to purchase the property for $100,000 and you have agreed to sell it for $130,000, the difference is $30,000. When the transaction closes, you will make a profit of $30,000. There are ways to sweeten the pot by offering a $5,000 to $10,000 discount for exercising the right to buy the property too early in the deal. It makes sense that you would want to consider doing this given the opportunity to get cash extremely fast. I would recommend that your contract provide for an early closing discount to be exercised within 12-15 months of contract signing. I want to warn you about a trend I’ve been seeing more and more frequently in lease option agreements.

There are some unscrupulous real estate investors who take advantage of people by accepting large down payments when they know there’s almost no chance they’ll ever be able to exercise the option to buy. Knowing that these people are almost certainly doomed to fail, they take their money anyway knowing that in a year or two they can repeat the process all over again with a new buyer. This is not only dishonest, it is immoral. Before giving in to the temptation to do something like that, ask yourself how you would feel if another real estate investor did that to one of your loved ones. I told him that it is important to keep your option agreement and lease/rental agreement separate. The reason you want to do this is because in the event that you need to legally terminate the agreement with the party you sublease the property to, you can take them to eviction court and it can be a quick, almost painless process. However, if the contracts are put together as one, some judges will mistakenly interpret the contract as a foreclosure proceeding, which can take much longer and cost you much more money in the long run. Leasing options can be a great way to quickly advance your real estate investment career.

As you can see very clearly, three profit centers make it a great way to receive a lot of cash when you initially sign the deal, as well as a continuous stream of positive monthly income during the lease phase of the contract, with a huge bonus. paid when the option is exercised. When those three streams of income converge, the potential could be a river of cash flowing into your bank account.