Purchase Option Investing

[Precious Thompson]

Does anyone have an experience in Purchase Option Investing ? if so can you tell me about your first deal

[Bill Gulley]

I'd say you're not talking about "puts" on pork bellies. Can you be more specific, are you speaking of just buying and selling an option or the lease-option arrangements? :)

[Precious Thompson]

lease option arrangement taking control of a property and finding a tenant buyer to lease it to with the option to buy after the term is up? Owner being flexible with the up front money. I was reading a book on it and wanted to know if anyone had any similar experiences.

[Bill Gulley]

Yes, much has been written about option deals here, probably too much (LOL) but just search and do some reading or wait, I think several have Lease Option as key word alerts and they should be swarming soon. @John Jackson

@Brian Gibbons

[Brian Gibbons]

Purchase Option Investing was coined in the mid 90s by David Finkel - Peter Conti, but I think it had its roots in Albert Lowry PhD in the 70's.

It has to do with

(a) buying on terms/ controlling properties, and

(b) selling on terms, selling for cash, holding on a lease.

Buying on terms/ controlling properties:

- Sub2

- Sub2 and Land Trust

- Wrap - AITD

- Lease Purchase (you must buy later)

- Lease Option (you dont have to buy later)

- Master Lease

- Master Lease with Option

- Contract for Deed - Installment Sale

- Private First Mortgage on Free and Clear Properties

- FROR - First Right of Refusal

- Land Trust and Selling the Beneficial Interest to the Home Buyer

- Buying Property but giving a Life Estate to Occupant

There are more of these types. There are pitfalls to these transactions.

Due on Sale Clause, where the loan can be called fully due and payable, is one of the pitfalls, and the DOS issue can be mitigated but not eliminated.

@Bill Gulley could write a book on "how not to do" all of these.

The Dodd Frank Act et al. will limit some creativity to some of these. And each state will impose its own special challenges, such as TX and NC.

[Bill Gulley]

Well, yes, but the easy way to spot a financing agreement is if there are any payments or credits made toward a purchase price or amount owing where the title to property secures the obligation or will be expected to be transferred. :)