In the last article, I told you how I lost $217,300 because I FAILED to do a Pure Option Deal on a property in Adairsville, Georgia. (A video about this deal is now posted on our website at BillandKimCook.com)
This article is about a deal I structured two months later where we did use a Pure Option.
Around May 2011, a lender accepted an offer on a short sale deal that Kim was working on. The house was off Fire Tower Road in Cartersville, Georgia. The lender agreed to accept our $94,000 cash offer.
We scheduled a back-to-back closing. The Deal: We buy the house at 9:00 AM for $94,000 from the lender, and then we sell it to our buyer at 10:00 AM for $115,000. This earned us a tidy $21,000 profit.
During the great recession, many investors were using this deal structure. Sadly, this is where they stopped. If they had only known how to do a Pure Option Deal.
Now for the rest of the story.
Our buyers knew they were getting a great home at a great price. Before we would agree to sell them the home that they really, really wanted, they first had to agree to give us a Pure Option at closing when they purchased the property.
This Pure Option gave Kim and me the right to buy the property from our buyers anytime in the next 25 years for $115,000. We also agreed to not exercise our option in the first 10 years of the agreement. One last thing we agreed to that made this Pure Option Deal work: If we exercise our Option and purchased this property, when we sell it, we will split the net appreciation 50/50 with our buyers.
Check your calendar. It’s 2022. It’s been 11 years since we did this Pure Option deal. We’re not going to do it right now, but what if we chose to exercise our Option tomorrow? What if we again did a back-to-back closing?
Today, this home is worth about $425,000. This means our portion of the split will be $155,000! ($425,000 – $115,000 = $310,000/2 = $155,000).
What if all the Short Sellers back during the Great Recession had Pure Options in their deal structuring toolbox. How much more could they have made?
Now, let’s talk about you. Can you afford to not know how to do Pure Options?
Kim and I are forever grateful to Jack Miller for teaching us how to creatively structure with Pure Options. His lessons have had an incredible impact on our financial lives!
We look forward to seeing you May 21st & 22nd, 2022, in Tampa, Florida at our Power of Pure Options seminar. There is no other real estate investing course like this one being taught anywhere else in the country.
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