SO MANY WAYS TO BUY (PART 3) BRUCE KELLOGG
Two cautionary remarks: 1) ALWAYS make sure the
option and lease agreements are separate documents
so a judge cannot order the refund of the option
consideration to the tenant by characterizing it as a
rental deposit. 2) Obtain a quitclaim deed any time an
Options are particularly useful for reserving properties option is not exercised in order to maintain a clean
without appearing on the public record until the title.
options are exercised. Developers do this to
accumulate parcels without “tipping off” other players
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in the market that they are buying. An individual can
negotiate an option in an appreciating market and This method applies primarily to commercial
exercise the option later without the costs of rehabilitation projects. The idea is to find a building
ownership in the meantime. It's an excellent way to that has “gotten away from” its owner and become
speculate, and fortunes have been made this way. rundown with vacancies that are not being filled. A
“Master Lease” is negotiated with the owner to take
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over rehabbing and retenanting the building,