If your after information about property options seminars in Australia .. you cant go past Mark Rolton of Massland.
Mark Rolton

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Why You Should Add Real Estate Options to
Your Repertoire of Strategies
Typically, many real estate options are bought more on speculation than on anything
else. However, buying real estate options on speculation is not what this
book is about. If you follow the advice contained in this book, all you should be
doing is changing your name from buyer to real estate optionee. When used
properly on the right types of undervalued properties, real estate options provide
an excellent low-cost, low-risk, high-profit potential property control technique,
which knowledgeable, savvy investors should add to their repertoire of real
estate investment strategies. The real estate option strategies outlined in this
book are based on a very simple concept:
1. Buy a low-cost real estate option on an undervalued property with immediate
resale profit potential.
2. Package the property under option to highlight its best future use.
3. Market the property under option on the Internet to potential buyers
worldwide.
4. Sell the real estate option on the property for maximum profit.
Twenty-Four Good Reasons to Buy
Options Instead of Properties
I am willing to bet anyone an ice cold case of Beck’s Beer that the numerous
commercial real estate market meltdowns that have occurred during the past
30 years would not have been so severe if the high rollers had bought more real
estate options instead of properties. In this way, if they did not want to exercise
their real estate options, they could have simply let them expire, and that would
have been the end of it. And they would not have incurred any of the transaction,
maintenance, management, holding, and debt service costs that eventually
forced them to go belly-up. In other words, they would not have been
saddled with the financial responsibility and personal liability that go along
with outright property ownership, and they automatically would have avoided
having to:
1. Fill out intrusive loan applications.
2. Qualif y for new loans.
3. Make monthly loan payments.
4. Circumvent loan due-on-sale clauses.
5. Worry about liability lawsuits.
6. Support negative cash f lows.
7. Contemplate being foreclosed on.
8. Collect tenant rental payments.
9. File tenant eviction lawsuits.
10. Chase deadbeat tenants.
11. Go into debt.
12. Buy any property.
13. Pay outrageous loan fees.
14. Assume existing loans.
15. Make expensive property repairs.
16. Babysit tenants.
17. Fret over escalating property taxes.
18. Fill vacancies.
19. Pay exorbitant property insurance premiums.
20. Maintain property and tenant records.
21. Clean up after messy tenants.
22. Pay transaction costs.
23. Assume financial and personal liability.
24. Manage property.
Potential Risks That You Cannot Control
When Using Real Estate Options
Although I consider the use of real estate options to be a relatively low-risk investment
strategy, there are potential risks that you cannot control when using
real estate options. For example, the property under option could be:
1. Foreclosed on.
2. Placed under the control of a federal bankruptcy court trustee.
3. Condemned by a government agency under the right of eminent domain.
4. Destroyed by fire, storm, or earthquake.
5. Taken as part of a government asset forfeiture lawsuit.
When I was starting out as an option investor, I bought a one-year option
on a run-down commercial property in Ruskin, Florida, that belonged to a fertilizer
manufacturer. And two months later, the company filed for protection under
Chapter 11 of the U.S. Bankruptcy Code, and the property I owned an option on
came under the control of a court-appointed bankruptcy trustee. The judge presiding
over the case in U.S. Bankruptcy Court in Tampa ruled that my real estate
option to purchase agreement was personalty or personal property and that I
did not have an interest in the property. The case dragged on for over two years
and, in the meantime, my option expired and I was out my $3,500 option fee. The
$3,500 lesson that I learned here was to always do a lawsuit search on the individual
or business entity that owns the property before I ever plunk down my
hard-earned money to buy an option.
Use This Book to Become Your Own
Real Estate Option Expert
I want you to use this book to educate yourself so that you become your own real
estate option expert. I say this because there are very few sources of reliable information
and advice, other than this book, available on straight or naked real estate
options. My experiences have shown me that many of the people who claim to
know all about real estate options really do not know diddly squat about the subject.
Case in point: When I first started using options, I had a title age
1. Qualif y for a loan.
2. Pay a down payment.
3. Pay closing costs.
4. Pay for repairs.
5. Buy any property.
The Lease
1. Two-year lease agreement.
2. Two-year real estate option agreement.
3. Fixed purchase price that is at least 20 percent below the property’s current
market value.
4. Rental rate that is at least 10 percent below the property’s fair market
rental rate.
5. One-year extension clause in the lease agreement.
6. One-year extension clause in the real estate option agreement
Step 1: Meet with planning or zoning agency staff members to have your application
reviewed.
Step 2: Submit a completed rezoning application that includes an affidavit
to authorize the agent form bearing the notarized signature of the property
owner, and pay the applicable rezoning application fee.
Step 3: Send written notification of the rezoning request to all the surrounding
property owners.
Step 4: Make a rezoning presentation before the local planning or zoning
hearing master.
Step 5: The planning or zoning hearing master makes a recommendation
on the rezoning request to the local governing body where the property is
located.
Step 6: Attend one or more public hearings in front of elected officials and
planning or zoning agency staff members, during which public comments
are heard and staff members make recommendations to elected officials.
Step 7: Attend a final public hearing in front of elected officials before they
take a final vote to approve or deny your rezoning application.
For further information on planning, land use, and zoning, log on to the following
1. Parties.
2. Agreement to lease.
3. Legal description of the property.
4. Term of the lease.
5. Holdover.
6. Lease rental rate.
7. Security deposit.
8. Services and utilities.
9. Use of premises.
10. Signs.
11. Waste, nuisance, and illegal use.
12. Maintenance, repairs, and alterations.
13. Entry and inspection.
14. Damage or destruction by fire, storms, and earthquakes.
15. Condemnation.
16. Notices.
17. Applicable law.
18. Arbitration of disputes.
19. Legal costs.
20. Execution of the lease agreement by landlord and tenant.
3. Legal description of the property.
4. Term of the sublease.
5. Holdover.
6. Sublease rental rate.
7. Security deposit.
8. Indemnification of lessor and sublessor.
9. Services and utilities.
10. Use of premises.
11. Signs.
12. Waste, nuisance, and illegal use.
13. Maintenance, repairs, and alterations.
14. Entry and inspection.
15. Damage or destruction by fire, war, or acts of God.
16. Condemnation.
17. Default by sublessee.
18. Termination and re-entry by sublessor on sublessee’s default.
19. Default by lessor or sublessor.
20. No right to assign sublease agreement.
21. No subletting.
22. Surrender of premises and keys.
23. Disposition of fixtures and personal property upon expiration of sublease.
24. Removal of property by sublessor.
25. Sublessee’s insolvency, bankruptcy receivership, or assignment for creditors.
26. Notices.
27. Applicable law.
28. Arbitration of disputes.
29. Legal costs.
30. Execution of the sublease agreement by sublessor and sublessee
1. The Internet.
2. Property wanted ads.
3. Bird dogs.
4. Finder ’s fees.
5. Direct mail.
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,
Real Estate Options and the
Doctrine of Equitable Conversion
Under what is known as the doctrine of equitable conversion, once a real estate
purchase agreement is signed by all parties and becomes effective, the buyer becomes
the equitable owner and the seller retains bare legal title to the property
under agreement. However, under a real estate option, the equitable conversion
does not occur until after the option is exercised and not when the real estate option
agreement is signed by all parties and becomes effective. This is because
there is no legal obligation to buy and sell until after a real estate option is exercised.
After a real estate option is exercised, the optionee-buyer retains equitable
ownership of the property.
The difference between a real estate option agreement and a standard purchase
agreement is that there is no contractual obligation to purchase the property.
For example, when a buyer and seller sign a purchase agreement, they
become legally obligated to buy and sell the property under contract, and either
party can be sued if he or she fails to do so. However, when an optionee and optionor
sign a real estate option agreement, the optionee has no contractual obligation
to purchase the property under option. An optionee can let a real estate
option expire, and an optionor has no legal recourse against the optionee.
Why a Straight Real Estate Option
Agreement Is Not an Executory Contract
An executory contract is generally defined as: “a contract where both parties have
an obligation to perform in the future.” And state and federal courts nationwide
have traditionally held the view that straight or naked real estate options are unilateral
contracts, under which the obligation to perform rests solely on the optionor,
while the optionee is under no obligation to do anything whatsoever. The
only notable exception to this is when an option agreement is included in a federal
bankruptcy petition and the optionee has notified the optionor of his or her
intention to exercise the option prior to the bankruptcy petition being filed.
The Seven Key Elements of a
Real Estate Option Transaction
A real estate option transaction consists of the following seven key elements:
1. Optionee: Optionee is the party buying a real estate option. Once a real estate
option is exercised, the optionee becomes the buyer.
2. Optionor: Optionor is the party selling a real estate option. Once a real estate
option is exercised, the optionor becomes the seller.
3. Real estate option: When an optionee buys a real estate option, he or she
buys an exclusive, unrestricted, and irrevocable right and option to purchase
a property at a fixed purchase price within a specified option period.
4. Option consideration: Option consideration is the amount of money paid by
an optionee to buy a real estate option from an optionor.
5. Option period: The option period is the specific period of time stated in the
real estate option agreement in which the option is in effect.
6. Exercise of option: The exercising of a real estate option occurs when the optionee
notifies the optionor, in writing, that he or she is going to exercise
the real estate option and purchase the property under option.
7. Expiration of option: A real estate option expires when an optionee fails to
exercise his or her real estate option within the option period stated in the
real estate option agreement.
How a Real Estate Option
Transaction Works
Here is a sequential outline of the mechanics of a real estate option transaction:
Step 1: The optionee pays a real estate option fee to the optionor.
Step 2: The optionor grants the optionee the exclusive, unrestricted, and irrevocable
right and option to purchase a property at a fixed purchase price
during the option period by executing a real estate option agreement with
the optionee.
Step 3: The optionee assigns or exercises his or her real estate option or lets
it expire.
Step 4: Once exercised, a real estate option agreement turns into a bilateral
agreement in which the optionee becomes the buyer and the optionor becomes
the seller.
Step 5: The seller transfers the property’s title to the buyer at the closing.
The Legal Status of Real Estate Options
Varies from State to State
Unfortunately, there’s no Uniform Commercial Code equivalent for real estate
options. The legal status of real estate options varies from state to state. In most
states, the legal status of real estate options has evolved over the years from a
combination of common and case law. The case law that regulates estate options
in most states is the result of various lawsuits involving legal disputes between
optionees and optionors over the use of real estate options. To know the legal
status of real estate options in your state, you should consult with a boardcertified
real estate attorney who is familiar with how real estate options work
in your state. I suggest that you ask your real estate attorney the following four
questions:
1. What constitutes a valid and fully enforceable real estate option agreement?
2. Does a real estate option, prior to its being exercised, create an estate in
land?
3. Can a real estate option be recorded in the public records so it constitutes
constructive notice?
4. Does a real estate option violate any rule against perpetuities that your
state may have?
In some states, most notably California, courts have ruled that real estate
options are personal property rather than real property. For example, in a federal
bankruptcy case, In re Merten, 164 B.R. 641 (Bankr. S.D. Cal. 1994), the
court ruled that under applicable California law, an unexercised option to purchase
real estate is personalty—personal property—and not realty—real property.
I suggest that you check with a real estate attorney to find out if real estate
options are considered to be personalty or realty in your state. Your state’s real
property statutes should be available online via the Internet or at your county’s
public law library. If there is not a public law library in your area, check with
your local public library to see if they have a current copy of your state’s civil
statutes. A listing of state statutes, by subject, is available at the following web
site: www.law.cornell.edu/topics/state_statutes.html.
No Licensing Requirement to Buy and
Sell Options for Your Own Account
Every once and awhile, I will read on the Internet that a private individual investor,
acting as a principal on his or her own behalf, must have a real estate
salesperson’s license to buy and sell real estate options. This is unadulterated
bullspit! The fact of the matter is that there are no states that have licensing requirements
for private individual investors who act as a principal when buying
and selling real estate options.
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