question about advanced options recording 9

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  • on chapter 9 of the advanced options recording with Jack Miller, go to 8 minutes 50 seconds. Jack is describing a deal on a commercial piece of land where the owner was going to lose his property. Jack makes a deal to pay the remaining balance of 40,000 and throws in two houses for the property owner to do with as he pleases. Jack’s conditions are that the total amount, the 40,000 plus the value of the two houses would be lent at 10% and Jack has an option to buy the property for what he has given. Because Jack didn’t know what the value was of the land his condition was that the property owner could buy back his option until the amount accrued was more than half the value of the property.

    I don’t understand some of the mechanics of this.

    1) when Jack says the 10% is compounding is he saying that he is adding the 10% every year to the debt and that new amount is now at 10% for the next year? how is he structuring that I’m not clear

    2) how will the final value of the property be determined? how does he handle that? is this about an offer coming in and jackets first right of refusal? Is this about an appraisal?

    3) I can see how buying a property at a fraction of the price with an option is fine for when someone is in deep trouble, but what happens when they’re just stuck and they’re not in deep trouble what approach would we use?

    Jonathan,

    I’ll have to come back to this question when I have more free time.

    Bill

    thanks. I’m preparing for your upcoming course. I want to make sure that I know everything that Jack was talking about solid so that I can get the finer points when I’m in your course =)

    Jonathan,

    We’ve been in the process of moving banks to a bank that does ACH and has great customer service. I’ve not looked at this problem yet.

    BC

    Hey Bill. Can you help revisit this question

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