., incentivize by saying the purchase price will be $285,000 if they exercise their option on or before 2 years, or negative reinforcement by having set rental increases if they do not exercise the option by x date?

It gives me a good picture of the cash-flow in the most recent fiscal period (typically a year), but to carry that forward 2, 3, 5 or 10 years encompasses as many assumptions and predictions as does calculating an internal rate of return.Now, you can discount future cash flows and endeavour to calculate a series of CoC values ... or, perhaps an average CoC over a period of time ... but you are now getting into an exercise which is not entirely different than determining/projecting a rate of return :-)  Naturally the cash return is a component of overall rate of return."

@Brendan JacksonI think going about it the manual at first can be a helpful exercise.

He has no heirs, and beyond the age of having any, so if he passes away before I exercise it what happens to the option?

I value education because it is more than just a piece of paper you get.It is the ambition the discipline, it is aiming high, and your mind is like any other muscle. you need to exercise it for it to grow bigger and stronger.Hell I am crushing it in my market BECAUSE I am a NASA caliber robotics scientist.I became a master at SEO because I see numbers.

So going after tenants that can't pay is a fruitless exercise.

Also there are not capital gain taxes with 1031 exchange which he exercised by buying the Texas and Tennessee properties.

The price and all other terms should be stated clearly, as the option may become the sales agreement when the buyer (optionee) exercises the right to purchase.2) Assume you are in need of money and ask broker John to negotiate a second trust deed loan for you.

The agreement spells out that you do not have an agreement with anyone else (brokers,fee takers,etc.) that would junk up the deal.This is why it is important to use a buyers broker for commercial more upfront than mid-way or back-end of a deal.You can make LOI's fully binding on all parties, or parts of the LOI, or nothing at all.Having said all of this the reason they want you to see the property is I have had talks with other listing brokers on commercial properties and an out of state investor or out of the country gets here and then decides not to move forward.The exercise wastes a bunch of people's time.

The module did include some exercises which was nice (as far as I'm concerned, the more hands on exercises I can do, the more comfortable I feel with the topic)... and it did a great job picking apart Capitalization Rate, Levered vs Unlevered cost of capital, NPV, and more.