The option offers both the seller and buyer risk management benefits. The seller keeps the property, although its title may be temporarily encumbered by the option. The buyer receives limited rights to the property, without having to shoulder the burden of carrying costs such as mortgage payments, taxes, insurance, management and operating expenses.
Yes, the buyer will have to make a non-refundable deposit. But that small fee buys the investor time to conduct due diligence and possibly market the property. If the investor decides not to exercise the option to purchase the property, the money lost is considered a capital loss and can be used to offset capital gains from other investments.
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