Developers are usually not patient people - they tend to think in large dollar increments, and they are typically well known around town. This means they are not going to spend the time looking for and negotiating options on several small lots. Even if they did, the owners would get wind that something was in the air because of knowing the developer by reputation, and they would raise their prices dramatically.
Rather than spend all the time necessary to find such deals, developers are usually willing to let people like you do it for them. Everyone in the entire food chain, from giant shopping centers down to one-acre parcels for neighborhood office buildings, depends on people like you to spend the time, energy, and effort to bring them deals.
A lease option is a specialized type of option. It gives a tenant the right to buy the leased property at some time in the future, usually for a predetermined amount. Sometimes all rent payments will be credited toward the purchase price, and other times they will not. This is entirely a matter of negotiation between the parties. In most states, if the option is contained within the lease or a renewal lease, then the tenant does not have to pay a separate fee for the option. But, if an existing tenant is given an option, then usually the tenant must pay a separate fee to make the option enforceable.
As an investor, you might want to sell rental properties to your tenants under a lease option. In some states, this is an excellent way to manage potential tenant/buyer default without going through all the time and trouble of a foreclosure - you simply terminate the lease, and that is the end of it. In other states, tenants with lease options are given many of the same protections as mortgage borrowers. Be sure to consult with a local attorney before entering into such a relationship.
No, an option is completely different from a right of first refusal.With an option, the seller must sell if you decide to buy. In a right of first refusal, the owner must give you the first chance to buy the property, but only if the owner decides to sell. If the owner decides to keep his or her property, there is nothing you can do to force a sale. In an option situation, you have all the power. In a right of first refusal situation, the owner has all the power.
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