Real Estate Options: What They Are, How They Work, and Why You Should Use Them
Ifirst want to thank you for investing
your money in a copy of How to Make Money with Real Estate Options. This oneof-
a-kind book was written for serious, rational, reasonable, intelligent, realitybased,
goal-driven, and action oriented adults who are willing to take calculated
risks in order to profit from the many money making opportunities that real estate
options provide today. I am a firm believer that a real how to book should
tell its readers precisely what to do while providing detailed instructions on exactly
how to do it. I also believe that a how to book should live up to its title. And
I am very confident that this unique book will exceed your expectations on both
counts! As you will soon find out, it is packed with step by step instructions,
ready to use worksheets, checklists, letters and agreements, and practical, nononsense
advice on how to use real estate options to control undervalued properties
with immediate resale profit potential.
Learning about Real Estate Options
When I first got interested in using real estate options in 1985, there were no publications
available like this book. The scant amount of information that I was
about to scrounge up about real estate options told me just enough to be dangerous,
but not enough so that I really knew what I was doing. This lack of solid information
meant that I did not have the luxury of learning from someone else's
mistakes. I had no choice but to go it alone. So, how did I become my own real estate
option expert? I did it the old fashioned way. I went out on my own and
learned the hard way how real estate options really work. I did a lot of research,
talked to a lot of knowledgeable people, and asked a lot of questions. Then, I went
out and bought some real estate options and made the inevitable mistakes, which I
learned from. And while all of this was going on, I took copious notes to keep track
of my trials, tribulations, numerous mistakes, and firsthand experiences as a real
estate option investor. Those notes are the basis for this book.
What You Need to Know about
Real Estate Options
Real estate options are a little known and seldom used investment strategy probably
because the only time that most people ever read or hear anything about real
estate options is when they are bandied about, willy nilly, on real estate web site
message boards or discussed at real estate investment club meetings by people
whose collective knowledge of the subject would not fill a thimble. However,
when fully understood, properly prepared, and used correctly, real estate options
are an excellent way to conserve capital, create leverage, reduce risks, and
gain control of properties with immediate resale profit potential.
But, to avoid the potential problems and pitfalls that plague most uninformed and unsuspecting
real estate option investors, you first need to know:
1. The difference between a straight or naked real estate option and a leaseoption.
2. What a real estate option is.
3. The seven elements of a real estate option transaction.
4. How a real estate option transaction works.
5. The legal status of real estate options in your state.
The Difference between a Straight
Real Estate Option and a Lease Option
First things first: There is a world of difference between the straight or naked
real estate options that I am writing about in this book and the rather ubiquitous
lease options that everyone and their brother has written about over the past 10
years. For starters, the real estate option agreement that I am writing about is a
stand alone document, which is not part of a lease agreement. Second, under
the terms of a lease option agreement, the lessee optionee takes possession of the
property under lease and is legally obligated to pay a monthly lease payment. The
only payment required on a real estate option is a one time option consideration
fee. And unlike real estate options, lease options violate the loan due on sale
clause contained in residential mortgage or deed of trust loans. In other words, in
the event that a lender discovers that a property owner has entered into a leaseoption
agreement, the lender could call the mortgage or deed of trust loan due and
foreclose if the loan was not paid off in full.