Real Estate Options

One way to invest in the path of progress

October 10, 2024 • Estimated Reading Time: 2 minutes

In partnership with

Real estate options are contracts that give you the right, but not the obligation, to buy or sell a property at a predetermined price within a specific time frame. Here’s how you can use them for profit:

How Real Estate Options Work

  1. Option Fee: You pay a fee to the property owner for the option to buy the property later.

  2. Option Period: You have a set period during which you can decide to buy the property.

  3. Exercise the Option: If you decide to buy, you pay the agreed price. If not, the option expires, and you lose the fee.

Example

Find a large piece of property in the path of development. Draw up an Option Contract offering to pay X for the property one year from now. Once under contract, take steps to increase the value of the property, such as get zoning changed to residential. Sell to a developer. Close on your purchase with a bridge loan and then close on your sale.