You can use many advanced strategies with options.
- Contract for Option. For tenants we never give an option. Most states require a foreclosure to cancel an option, a lengthy process. The tenant gets a contract to receive an option after he has made 36 or whatever number of payments on time. He will then be granted an option valid for 90 days, to get a loan and purchase the property.
- Distressed Property Option. Properties in disrepair that are not rentable or salable are controlled with a purchase option. The seller will be paid at the closing after the property is rehabbed and sold. Instead of investing $100,000 for the property and $20,000 for a rehab and making $25,000 profit. We invest $20,000 and profit $25,000.
- 1031 Exchange Timing Option. Options can be used to adjust the timing of the purchase or sale to comply with 1031 exchange rules. If a person has a property for sale and has a contract to close in December, this will cause a tax in April of the following year. He could grant the buyer a 60 day lease option and defer the closing until January. Instead of a reverse exchange, which is costly and complicated, the exchanger could lease option the replacement property until his relinquished property is sold. He can then use the funds to buy the optioned property.
- Option on Beneficial Interest. Instead of an option on the property you can option the beneficial interest and become the owner without public records. This is one of the dozens of strategies available to investors using trusts to hold title. A person can be the equitable title holder and receive the tax benefits without being the record title holder.
- Perfected Lease Purchase Option. Our method of lease purchasing property includes an escrow of all signed documents, deeds, mortgages, notes etc. There can be no changes of mind by the grantor or the heirs.
- Default Option. Buy an option to purchase the property or a note that you have sold if it defaults. You can obtain this option by selling the property or note at a slightly reduced price. You may solve the problem and make a profit.
- Options with IRA Funds. The most dramatic and highest leverage gains for IRA accounts, without risk, can be made on property, notes etc. A wise thing to do is to quickly sell the option to a waiting buyer for a 500% markup, quickly and without rehab, note work out costing time and money. Maintain an inventory of potential buyers for various types of real estate and notes. They may be multi-units, commercial, land and other types of real estate that you do not buy. Other people do. Repeat again and again.
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