What are Property Options?
Property options are a way to control development sites with potential. In a flat property market, some developers are using property options to give them the right to purchase a property they believe offers opportunities for development. It is controlling and profiting from property without ever being the owner and it is your first step to financial security for your future. Property Options are such flexible and creative tools that they can often be applied to benefit Landlords, Sellers, and those who want to invest in a home. It poses no risk.
An option is the right to convey a piece of property. The person granting the option is called the optionor (or more usually, the grantor) and the person who has the benefit of the option is called the optionee (or more usually, the beneficiary).
In a nutshell it’s a way of a developer securing a property before the potential of the property is fully known. If the development application is approved, the investor will generally go ahead and exercise his or her right to acquire the property. When investors take out an option against a property it gives them the right, but not the obligation, to purchase the property within a defined time period, often 12 months, usually for a pre-agreed price. The idea is that during the life of the option the investor will explore opportunities to develop the property, for instance by seeking to have a development application successfully approved by council or by having a property rezoned
Options characteristically exist in one of two forms:
- Call options, which give the beneficiary the right to require the grantor to sell or convey the property to them at the agreed price on exercise
- Put option, which give the beneficiary the right to require the grantor to buy or receive the property at the agreed price on exercise.
Because options amount to dispositions of future property, in common law countries they are normally subject to the rule against perpetuities. ), In many countries an option must be registered in order to be binding on a third party.
Types of property option
Purchase Options, Lease Options and Double Lease Options are powerful ways to generate cashflow and build a property portfolio fast. There is no more creative way to grow your property portfolio.
Steps on how a property option works
- The option holder will option the property
- The option holder will get approval development on the property
- The option holder will assign the property to the beneficiary.
- The buyer settles with the option holder
- The buyer settles with the grantor.
Advantages of a Property option
• Property Options can be used to break free of the Landlord Trap
• To buy your dream home through an Installment Purchase Option
• Overcome negative equity and sell at top price through a Lease Option
• Get ahead of the competition by creatively solving other property problems
• Buy investment Property with Lease Options to generate cash flow without a mortgage!
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