4 ms·

Stuff like this seems like standard practice in the real estate industry (I am not an expert) For instance, I know one strategy called "land entitlement"[1]:

Stuff like this seems like standard practice in the real estate industry (I am not an expert) For instance, I know one strategy called "land entitlement"[1]: Step 1) Find an area that has demand for a type of building or business that it is not zoned for. Step 2) Buy an option on a plot of land in that area. Step 3) Lobby the government to rezone that area / approve your project Step 4) Execute option and acquire land and a fraction of its new valuation This isn't directly analogous to the what happened in this instance, but essentially this is just a way for people with influence in local government to make money. Imagine if someone with connections to the FDA bought an option on a biotech stock and then convinced his friend, the commissioner, to help get their drug through the approval process. I'm pretty sure that would be illegal (or at least a gray area) -- but it's fair game in real estate. [1] https://cashflowconnections.com/land-entitlement-with-chris-tourtellotte/ https://cashflowconnections.com/land-entitlement-with-chris-...

lbriner 8y ago
This is different because it involves risk. You might lobby the government and they might reject your proposal. That doesn't make this illegal though - but there is a difference.
ip26 8y ago
I wonder if that would be considered graft? "reverse" graft?
lifeisstillgood 8y ago
i would not know where to begin with land options - is there a primer. it sounds like a thing designed for people with corrupt control over local councils
- stass 8y ago
  You can write or buy an option on anything — it’s just a legal contract.
- dmurray 8y ago
  The way I've heard this working is: you approach the landowner with a really good bid for his land ($5m for his property worth $4m). He agrees to sell, but you have trouble coming up with the money, and ask him if he can keep the offer open for a year or so. He isn't thrilled with this, but you offer him $250k up front, to be forfeited if you don't come up with the rest of the money. This makes the $250k look more like a token of good faith and less like an undervalued option, but it comes to the same thing.

lbriner 8y ago

This is different because it involves risk. You might lobby the government and they might reject your proposal. That doesn't make this illegal though - but there is a difference.

ip26 8y ago

I wonder if that would be considered graft? "reverse" graft?

lifeisstillgood 8y ago

i would not know where to begin with land options - is there a primer. it sounds like a thing designed for people with corrupt control over local councils

stass 8y ago
You can write or buy an option on anything — it’s just a legal contract.
dmurray 8y ago
The way I've heard this working is: you approach the landowner with a really good bid for his land ($5m for his property worth $4m). He agrees to sell, but you have trouble coming up with the money, and ask him if he can keep the offer open for a year or so. He isn't thrilled with this, but you offer him $250k up front, to be forfeited if you don't come up with the rest of the money. This makes the $250k look more like a token of good faith and less like an undervalued option, but it comes to the same thing.