Are straight options good when without sufficient buyer's list?

[Benjamin Cowles]

once a seller asked me, in other words, 'so what do ya want? I got all kinds of properties, wutcha want?' and I remember fumbling through my mental script but now I'm thinking I should have told him what my heart felt which was 'Well I want them ALL MUWAHAHA....' and then another time a seller had a pretty good package deal on three of his tenant filled homes which I expressed interest but ultimately gave up after failing to sell him in any seller financing. So I'm wondering if purchasing straight options from these sellers, say for 10% of the purchase price, then resell the individual options would be a good strategy. I don't see why not but I haven't read much about straight options.

[Doug Pretorius]

@Benjamin Cowles What do you mean by "10% of the purchase price"? If you mean getting it under contract at 10% of the value of the property, then hell yes you'll make out like a bandit! If you mean 10% OFF the value then yes you might be able to make some money, with a lot of hard work. If you mean actually paying the seller 10% of the purchase price for an option then NO that would be a great way to lose your shirt.

Personally I've never paid more than $1 for a straight option. I've had straight options on well over 100 properties and I've tried a variety of strategies.

I've tried getting them 5-15% below market value and marketing them myself. This is an unbelievable pain in the backside and not at all worth your trouble, if this is all you can get the seller down, then you're far better off taking over their payments and renting or renting-to-own.

The only way that straight options really work is to get the property for an absolutely bare minimum of 15% below market value and hiring an agent to sell it for you. This is called wholetailing, you might want to read up about it here on the forum. Essentially you can list the property at 95% of market for a quick sale (in a good market), pay your agent, and still make some money for finding the deal. This works pretty well here in Canada because we have very low seller costs. In the US you're probably going to want to get the property at more like 20% below to pay all those crazy fees.