Controlling W/ Options...
Hello all,
OK. I read each topic in this forum and I am wondering why no one has mentioned controlling some of the low priced deals w/ 30-60 day options and then market the property for resale.
My plan is to purchase commercial properties w/ option contracts and then sale. The reason I am fascinated w/ this concept is b/c it is low risk, very little money required, can be done w/ frequency, which leads to my favorite reason: CASH MONEY!! I mean it doesn't take a huge markup in price on property in excess of 200k to make a killin'. Imagine doing 2-3 a month.
But what is odd to me is that this technique doesn't seem to be very popular or discussed a lot. I wonder why.
Is this rare? Has commercial property been proven to have a slow turnover rate when selling at retail. I've read a few times that Donald Trump does this quite often.
Will someone shed some light on the subject??
[addsig]
Options are one legitimate way of doing what you describe but are usually not used for such short periods of time. The reason for this is that if all yo need is 30 to 60 days it is easy to do a Purchase and Sale agreement with a mortgage contingency or a 60 day closing. Instead of an option fee which is forfeit if you don't close you use an Earnest money deposit which you get back as long as the reason for not closing was contingency of the contract.
Sellers see P & S agreements all the time so there's not much to negotiating one. Show up with an Option agreement and you are going to spend some time explaining what it is and more time getting it reviewed by the sellers attny.
On the other hand, options in the 6 month to 5 year time frame are superior to the P & S because sellers are likely to loose patience with a deal in that time frame and the Option is more enforcable in court.
So are you saying that it is more common to simply use a P&S agreement w/ a contingency that will allow you to sell the property as well? So theoretically, it's almost identical to an assignable contracts as far as the rights is concerned correct.
Is this method used in residential as well? The way I see it is : the less explaining that I have to do, the better.
Thanks for the reply.