With much whoops and marketing fanfare, Options began to seriously enter the market place around one year or so ago. So, after approximately one year where are we at? How are Options being used and what does the future hold?

My experiences are that Options have definately arrived – deals are being done and they arrive on my desk every day to put the legals together.  I am not seeing many sandwich options though.  Instead, investors are taking one step at a time – getting an option from a vendor and letting the Property to a tenant on a normal AST arragement. Afterall, it’s hard enough to do one deal, let alone two on the same Property! Having said this, it works.  The investor gets control of the Property and once you have control the opportunities exist.

The investor has the Property under an Option to purchase at a price the investor is happy with and with the rent (hopefully!) amply covering the mortgage.  In this way, you are also not contractually tied to a tenant buyer – you can wait until the market recovers and place the Property on the open market. If the market does not recover and the Property drops below the purchase price the investor has agreed with the vendor then the investor can simply let there Option with the vendor expire.  If the prices increase then you can cash in.  The flexibility, if used properly, can be a bonus.  If  the investor can keep the Property let, this is the magic ingredient that provides the flexibility and which can reap rewards later.

Where Options are going, is a very difficult question. It will probably be dictated by what the lending market place does. Sparse lending are the ideal conditions for Options but should lending criteria relax it will be interesting to see how this effects Options in the future. Watch this space. It will be interesting to hear your views and experiences so please do share.