The Leading Web Directory of Real Estate Investing Resources that will teach you how to Make Money by Investing in Real Estate.
The World's Largest Directory of Resources for Real Estate Investors
Home Courses Books Tapes Software Services Gurus
Subscribe to our "What's New" newsletter!
Learn how to make a Fortune Investing in Real Estate
Visit Real Estate Investing Depot Shop

Pure Options:
Your Investment of Choice
   by Ray Como   

Options are invisible id est private. They are "personalty;" it is difficult to attach judgments to them. They are portable making it easy to own pure options safely, privately and quietly in pro-business and tax free Nevada.

Pure Options defer tax liability and do not require management because they do not come with tenants. They can be exchanged, used as down payments, used in a buy-sell strategy, used to control assets without ownership, used as payment "in-kind" in lieu of installments due.

When deftly drafted Pure Options beat ALL due-on-sale clauses. In fact, a Pure Option is the only unstoppable way left to beat this tough FNMA due-on-sale clause. It reads:

If all or any part of the Property or any interest in it is sold or transferred (or if a beneficial interest in Borrower is sold or transferred and Borrower is not a natural person) without the lenders prior written consent, Lender may, at it’s option, require immediate payment in full of all sums secured by this security instrument...

The reason I say "unstoppable" is because a Pure Option is not an interest in the bundle of rights known as real estate. It is a contractual agreement to "create" an interest at a future date.

Options can be used to "straddle-the-fence" and transfer income from one tax year to another. They can be used in an "estate freezing" strategy by selling a fixed-strike-price option to ones children. They eliminate imputed interest questions because interest simply is not part of the equation.

They are risk-free because they are unilateral contracts. This means the seller has to sell, but the buyer cannot be force to buy. You should "option" instead of "mortgage" as often as you can when you are creating real estate deals. If you are smart, you can get Pure Options for free and sell them for cash. In fact, think about this:

With options, you can buy & sell assets you don’t even own! At this point, you are probably scratching your head and saying "Como’s nuts!" Well maybe, but in defense of my sanity, let me assure you of this—Anything you can deliver, you can sell.

Have you ever bought futures contracts? You know, like commodities futures, gold futures. I did. Maybe one of my personal war stories is the best way to illustrate the point.

In one of the more eclectic periods of my life, I thought it was prudent to "diversify." I chose to buy n’ fly with gold futures. I invested $10,000 in a "gold futures contract." This means I "controlled" 100 ounces of gold. The broker assured me "When the price of gold goes up $1, the value of your contract goes up $100. We sell and take our profit up to $700. Conversely, when the price of gold goes down $1, your contract is worth $100 less...and with a stop-loss of $700, you can’t lose...[not really.]" He grinned through the phone then he added "We ‘day trade’ which means we buy in every morning and sell out every afternoon. "You can’t lose" he repeated—thumbs in his belt loops and grinning again he said "We’ve been monitoring this gold market daily for fifteen years."

For the next three months I watched the price of gold in the Wall Street Journal while I bit my nails to the quip. The sad…er…educational thing was, I got out with $2,300 of my money and the broker made $6,900 because he made a cool $90 a trade! I Guess I was on the wrong side of that equation. (grin)

The point is, rarely does anybody take delivery of the gold or silver on which they bought the contract. When is the last time you heard of somebody actually having pork bellies delivered to their front door? The fact remains, they could have—they owned the right to.

It is the same thing I am discussing here. If you had the right or "the option" to buy anything; you also have the right to sell. There are mountains of case law and the precedent has been etched in granite right on Wall Street.

The fact remains, anything you can deliver you can sell—which should open up a whole new world of opportunity for you. Me? I love to buy and sell using options. In fact, what I like best is to...Sell First…Then Buy! Here is how:

We professionally "package" all our options by executing and placing into escrow, all documents necessary to transfer title. We protect our equity position and create an insurable interest by recording a mortgage to secure the optionor’s performance on that option. With the right but not the obligation buy, we find a new buyer. We sign a contract and schedule a simultaneous closing. Get it? To create a Mortgage To Secure Option simply add the following to any conventional mortgage or deed of trust.

This mortgage is being recorded to secure the satisfactory performance by the optionor in a certain option by and between Ray Seller and Nancy Buyer. Said "option" is of even date. Throughout this mortgage where the word "note" appears, replace it with the word "option."

© MMI By Ray Como. All Rights Reserved

Visit Ray Como's House Buying Kingdom Check Ray Como's Courses

Ray Como has created, produced, copyrighted and self-published 15 audio cassette programs and lots of other forms and tools for business, real estate, corporations, selling, marketing, finance, management and Entrepreneurship.
Back to Real Estate Investing Articles

[ What's New | What's Popular | Our Forums | Links to REI Forums | Real Estate News | Free Resources | Links ]

© 2001, 2002 The Real Estate Investing Depot