An option actually allows you to purchase the property at any time within the option time, not just at the end. In fact, there is a third option: I could sell this option for $10,000 to someone who would like to buy the property. They would pay $10,000 to me and $100,000 to the owner and eventually buy the property for its present value. The terms are a summary of the terms agreed between the tenant and the landlord, which were often negotiated with the assistance of an expert, and serve as the basis for the development of the lease by a lawyer. To enter into a legally binding contract, the following four main conditions would have been agreed: Our experienced team of commercial real estate lawyers willingly discuss the proposed terms of a new lease and a brief conversation at the beginning of an agreement can save a lot of time and costs. The option agreement indicates, among other things, the duration of the agreement, all the instalments due (which are paid to you) and the purchase price. The rental agreement (or management contract) indicates the amount you pay each month. LOAs are essentially a long-term partnership agreement between a lessor and a management company, as they bring reciprocal benefits to both parties. So the leasing options sound pretty good, from our point of view: it`s at the top, because there are two ways to take advantage of the option and we can just return the property, with no consequences if it doesn`t work.
Personally, I want the monthly income to be worth it during the option period – because I have no control over capital growth (or owner behavior), so I really don`t know if I want to buy the property in the end or not. (In that sense, I basically treat them as a rental contract with the extra bonus if I can buy if I want to.) But as we`ve seen, from your point of view as an investor, the leasing options are brilliant – so you might decide that the juice is worth it. Option fees: this is the sum of money that a potential buyer can pay to the seller at the time the contract is signed. This may be a face value or an agreed value that encourages the seller to enter into the option contract.