An investor who uses an option limits his risk downwards by jeopardization only his option payment, instead of a significantly larger share of his equity. Just like an SDP agreement, the option to buy would help to outline some milestones to be taken during an investor`s due diligence – contingencies, if you will. If you decide not to buy all the packages, the option amount will be applied to the remaining packages to be purchased, and the buyer will forego future options and lose some of his original option fee. The investor might have an option to buy a property for $1 million, but then he will find someone who is willing to buy the property for $1.2 million. The investor essentially reverses the option of another buyer, in the process earning $200,000, without doing anything other than signing a few papers. In this article, we look at how call options are used by both investors and pauches who are interested in tying a piece of commercial real estate. Another reason investors like to use options is that they buy you time to build up the capital they need for a project. For example, a contractor has $400,000 at his fingertips and wants to buy a $3 million listed property. The option clause in a commercial lease might look like this: for example, a developer could put an option on a property that imposes a purchase price of $15 million, but this option depends on the fact that the current owner is looking to change area with the municipality, which would allow a portion of the land to be used in the unit into an office/laboratory.
“The buyer [tenant] has the exclusive right and option to acquire the property described on the attached A exhibit during the term of the contract at the price of _________zu.” 1. The straight option that gives the buyer the opportunity to acquire the property for a specified period of time for a specified price. For example, a potential buyer might be interested in a 2-hectare property, currently intended for industrial enterprises. Meanwhile, the investor begins to redeem to find another buyer interested in buying the property.