Its nice to have OPTIONS

Discussion in 'Innovative Techniques' started by jweg, 8th Aug, 2012.

  1. jweg

    jweg Investor

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    I'm interested in exploring an 'OPTION to BUY' for my next investment property or development.

    Has anyone done this before? (experiences please).

    Better still does anyone have a document they have used in the past?

    Can anyone recommend a solicitor in Toowoomba or Brisbane that is experienced in this area?


    Theory is I would like to identify up to 10 potentially lucrative options, different dates, different vendors etc, with the view that if the dollars stack up I can either buy & flick, or on-sell in the future.

    My investment focus is to reduce LVR in the short to medimum term (5 to 10yrs).
    Currently 70% LVR on debt of $1M. Any advice or comments welcome :)
     
  2. matto_

    matto_ Member

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    loads of seminars/teachers working through these and other "creative" techniques at the moment.

    I have never gone down this path myself.
     
  3. jweg

    jweg Investor

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    My theory about Seminar Guru's is that if what they preach works "every time" they woudl have no reason to make money selling seminars (they'd be too busy making Millions)... I believe the "option to buy" strategy is a clever one -- but woudl love to hear from people who have done it before :)
     
  4. knightm

    knightm Member

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    I went to a free MASSLAND seminar once which had a lot of option content, they didnt give out a copy of an option agreement tho which is what I really wanted. It was a pretty salesey pitch sort of thing with some ok content in there.

    Rob Balanda is a well respected property lawyer with his own website and a set of resources including books and audio cds on various topics including this

    I got the JV one and the sample ageement seems pretty good - the other content was ok but less detailed than I would have thought for the money - really I paid for the sample JV document which I can ammend and save a few hours of solicitor time drawing one from scratch. So it might be worth the 160 bucks but only if you are gonna use it.
    No I dont get a commission for the Balanda plug
     
  5. jweg

    jweg Investor

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    I was encouraged yesterday to randomly meet someone trying to do the same thing Options wise.
    In a way I spose its like gambling on horse racing -- with the advantage of gambling $1 (OPTION) instead of a few hundred thousand.
    Would still love to see a template / contract document that someone has used....
     
  6. redwing

    redwing Progress Not Perfection

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    I know of someone who paid $15k each for himself and his wife ($30k total) to complete an options training course a year or more ago, they reasoned that all it would take was one deal to pay it back plus more.

    They are still looking for that deal
     
  7. ris4rob

    ris4rob Member

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    I got the JV one and the sample ageement seems pretty good - the other content was ok but less detailed than I would have thought for the money - really I paid for the sample JV document which I can ammend and save a few hours of solicitor time drawing one from scratch. So it might be worth the 160 bucks but only if you are gonna use it.
    No I dont get a commission for the Balanda plug[/QUOTE]

    Did you read any of the others?? clauses made simple i was looking at buying the set??
     
  8. Scott No Mates

    Scott No Mates ...and people wonder why?

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    An options agreement is a legal document for the purchase of property. It is accompanied by a contract of sale and full documentation. If travelling down the options path, engage a solicitor for the task. What is the point of saving a couple of $today when mistakes can be very costly (either stuck with a property or with an unenforceable contract).
     
  9. Propertunity

    Propertunity Real Estate Buyers Agent

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    When I was a selling agent some nearly 30 years ago, an Option to Purchase was just a standard form put out by the REI. There is nothing 'magical' about it.

    It looked very similar to this:
    http://www.australiatrade.com.au/Contracts/RealEstateOption/index.htm
     
  10. knightm

    knightm Member

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    No I havent read any of his others yet - I wanted to get the set too but a little too expensive for me at this stage. I would be happy to borrow yours tho!!!:D
    Maybe one day but as I said there were gaps in the content with the JV one.

    EG I am not sure how the JV payment that the owner (capital partner or JV1) pays to the JV2 (the effort and expertise partner) is treated by the ATO - if they refinance to pay out the other partner is this tax deductible? I was hoping the audio would answer that and it hasn't.
     
  11. Aaron Sice

    Aaron Sice Seldom Seen Kid

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    so are the other 98% of graduates....:rolleyes:
     
  12. jweg

    jweg Investor

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    Reality Soup

    Very good point made by several.

    I would never pay 30K to learn anything - well maybe dentistry or brain surgery.

    My thought with OPTIONS is aiming to make an instant 5 or 10K by onselling the option to buy.

    I will probably spend maybe $750 (some legal advice, a template, and 5 to 10 options) plus many hours before I make a cent.

    However, if I can make it work once I am ahead. My line of work is suited to being able to offer available land - so hopefully this will be an advantage.
     
  13. cu@thetop

    cu@thetop Member

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    The option docs I have seen from various entrepeneurs usually have the standard REIQ contract attached with the buyer blank but all other details completed.

    The option document stitches up the seller with:
    A low deposit - $500 to $1000 perhaps
    A long period to exercise option (2 years)
    A consent of owner for entrepeneur or 3rd party to lodge Dev Applications etc at option holder's expense
    A right of entrepeneur to force sale under the terms of the contract either to self or a third party (it follows there is a right to assign the option)


    There's a few..... now off you go to scam some elderly people with valuable real estate. I recommend using a sleazy agent as your "in".

    Don't let the dreamstealers try and sink you with talk of unfair advantage , ethics or other such tripe.
     
  14. redwing

    redwing Progress Not Perfection

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    Where they used much in your younger days Propertuntity?

    How long (years) could an Option to Purchase go for?

    You have to question with some of these option type contracts, would any successful investors here ever sell using one?

    If you're looking at Commercial or Industrial Properties, then "I pity da fool" that proffers one of these types of contracts to Dazz for $500-1,000 ; I imagine the response would be entertaining at the very least
     
  15. jweg

    jweg Investor

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    Interesting. I believe one can remain ethical but still use options as a means of potentially creating equity --- I don't think targetting the elderly is necesarry (isn't that what reverse mortgages are for?).

    I take your point it would be the 'quickest grab' in terms of making money - but that is not shrewd investment, it is theft.

    The beauty of options IMO is you can agree a fair price today, pay next week (or several years later).

    Sure it advantages the buyer - but also can be set up to provide a guaranteed sale for the seller.

    I have 4 properties that I would 'option' if that was a means of achieveing a price I am happier with.
     
  16. redwing

    redwing Progress Not Perfection

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    Hi Jweg

    I'm sure there are many investors who can attest to the fact that they work, in fact the people i refer to above who paid $30k went into the program based on the fact that they spoke to someone who had made close to $1 Million on a deal

    They were hoping to replicate such a deal and even teamed up with another person on the program

    I suppose anything is possible with hard work, lots of networking and an ignorant or distressed vendor, who is also happy to wait 12-24 months for thier big payout or second prize of $1,000.00?

    Hopefully others here who have used them can give additional insight?
     
  17. jweg

    jweg Investor

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    Small Fisher

    30K is nothing if you land a $1M profit... but like any strategy, if it was easy we'd all be millionaires.

    I must admit I've been giving this idea much more thought since reading July or Aug API magazine (lady was just in the right place, right time and made big profit). That was a commerical property though - $1 option became a few $M in equity.

    I'm planning to focus on vacant land, or sub-dividable residential property. I wish to spend no more than $1,000 (securing 10 or more options) and will be ecastatic if I make $5K.

    All fun and games really... life I mean.
     
  18. cu@thetop

    cu@thetop Member

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    There's the thing-options usually won't work on commercially savvy types- who will only enter them for serious consideration; 20, 50 or 100k or more.... with that money forfeit on failure to exercise- and often not included to be reduced from the ultimate purchase price.


    Nah- guaranteed sale for seller is often illusory- Buyer will usually pull out or use a $2 company without guarantees to dodge liability.

    Here's an idea- Call ALDI and find where they are looking to establish a shop and go from there.

    Vacant land may be a bit easier but you will need to tip in to get your own zoning change/DA before you can flog it off to someone else.
     
  19. keith85

    keith85 Member

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    vendor finance.

    I went to a seminar the other day by Rick Otton. he does all sorts of different methods when selling property. I would like to hear from anyone who has used his methods. im also keen to get a second hand copy of his products like the massive passive pack if anyone has one for sale. From what i understand it all sounds pretty good. Im currently doing a renovation and i was thinking about selling it using vendor finance when im finished. then i can refinance it and pull most of my cash out of it while earning a good cash flow everymonth until the buyer refinances it through a bank. im pretty keen to do this but would like to read some more before i do it. If anyone has any further information or one of the packs for sale i would like to hear from you.
    Thanks.
     
  20. Lofty

    Lofty Member

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    Hi Keith

    If you are interested in vendor finance I'd suggest you consider attending your next local Vendor Finance Association meeting. Dates and details of meetings are available at: http://vendorfinance.asn.au/meetings-and-memberships/

    I believe it's important to build a good foundation to your vendor finance knowledge and there are numerous educators to choose from. Some that spring to mind are:
    Sean Summerville - http://www.thepropertyking.com.au/
    Rick Otton - http://www.rickotton.com/
    Dave & Julie Siacci - https://vendorfinanceinstitute.com.au/home/siacci-system-of-vendor-finance-1997/
    Paul Zalitis - http://www.aussiewrapper.com.au/Cash-Flow-Investing.html
    Gordon Ku - http://gordonku.com/
    It is worthwhile researching all these educators and choosing one that suits your style.

    May I also suggest that you do some research about buying with VF. Some suggested places to start are:
    http://www.propertyinvesting.com/strategies/wraps
    http://www.propertyinvesting.com/strategies/lease-options
    http://negative2positive.com.au/information/about-vendor-finance
    http://www.vendorfinancelawyer.com.au/vendor_finance_intro.htm

    Cheers, Paul