When you buy an option on a property with the intention of applying to have it rezoned for a more profitable use, you must be certain to obtain the optionor's written approval, allowing you to represent him or her before the government agencies that regulate the rezoning process in your city or county.
In my area, this document is called an affidavit to authorize agent, and it gives the property owner's authorized agent the right to sign any documents necessary to file a rezoning application. Make certain that you have this crucial document signed by the optionor and acknowledged at the same time the option agreement and title transfer documents are signed and acknowledged. You must also know the approximate time between when a rezoning application is submitted and when it is approved and put on the books. In some jurisdictions, it can take from three to six months, depending on how frequent the approving authority meets and their workload, to get a rezoning application approved. And this is exactly why it is imperative that you negotiate an 8- to 12-month option period when using the rezoning strategy, so that you are covered in case the application and approval process takes longer than normal. I learned this lesson the hard way on my first rezoning deal when I was given some bad advice by an incompetent attorney and signed a three-month option deal. Right after I signed the option agreement, I got a rude awakening when I learned that the county had a three-month backlog of zoning applications, which my legal whiz had failed to tell me about. I fired the clueless attorney on the spot and paid the optionor $2,500 to extend the option period for another five months. And seven months later, I finally got the property's zoning classification changed from residential to professional office and had a $20,000 payday when I resold my option to an attorney.
How You Can Use the LASH Strategy to Profit from Long-Term, Flat-Rate Master Leases and Real Estate Options
In Chapter 5, I told you how to use the lease and option strategy to profit from single-family houses. Now, I tell you how to use the LASH strategy to profit from long-term, flat-rate master leases and real estate options. LASH is an acronym that I have coined for "lease and sublease higher." The LASH strategy involves making money through the use of master leases, subleases, or sandwich leases and real estate options. The LASH strategy was used on the Empire State Building in New York City from 1961 to 2002. During this time, the National Historic Landmark was operated under a master lease. The World Trade Center was operated under a 99-year master lease before it was destroyed in the infamous terrorist attack of September 11, 2001. However, before you go adding LASH to your repertoire of real estate option strategies, you first need to know:
1. How the LASH strategy works.
2. Where to find valid lease agreements.
3. Why you must always use separate master lease and real estate option agreements.
4. The key provisions that must be included in your master lease agreements.
5. The key provisions that must be included in your sublease agreements.
6. How to best protect your position as lessee.
7. The key points to negotiate in your master lease.
8. The best types of properties to use the LASH strategy on.
9. How to thoroughly screen tenant applicants.
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The dynamics of investing can be very emotional and stressful if not properly managed. When you are aware of what is all involved you give yourself the power to avoid those situations or at least manage them effectively. That will make your investments more exciting, rewarding, and enjoyable. Those positive factors will only lead to greater success in all that achieve with investments and life.