Sandwich Lease Option Process

Is the contract used to do the lease option with the seller the same one I use with the tenant buyer? Can anyone guide me to where I can locate sandwich lease option contracts?

Thanks so much.

Edited: 06/26/2010 at 05:46AM

Brian Gibbons

Real Estate Coach · Monrovia, California

132 posts
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Icon_minipost Aug 26 '08, 01:48 AM

Here are some tips:

1. Sandwich LOs are when you lease with option from the seller, and sub-lease and sub-option to the TBer (Tenant - Buyer).

The contracts I have used for over 20 yrs is:
Lease Purchase with the Seller
Lease and sep Option to Purchase for the Tenant Buyer.

2. Finding the sincere TBer FIRST, then matching their wants - needs to the market is the way to go.

3. I like the cooperative assignment approach the best. [EDITED BY MODERATOR - No affiliate links in posts.]

3. Many times a $300K - $500K house will only rent for $2000 a month, not covering monthly costs PITI. If you teach this to a Seller, then you may be able to share in the profit at the ultimate cash sale in 3 - 5 years. Taking a negative cash flow now for a good sale later, does that make any sense? :lol:

The big thing about Lease Options is the financial cash flow of the TBer (I prefer dinks - "double income no kids"). Even if someone has a CH 7 BK, w a 5 yr LO, there is time to rebuild credit. and discharged CH 7's have little unsecured credit card debt.

There is more to the story re: sandwich lease options, but a big thing is:

"Mr. Seller, I don't know if this is a fit for you, but I may be able to solve this house problem, but only if you agree that I need to make a profit for my marketing and negotiation expertise. There are many difficult house problems now in your exact neighborhood. Tell me please, how do you feel about me making a profit?"

And LISTEN!

I hope this helps you,

All the best,

Brian Gibbons
Lease Option Coach

Edited: 06/26/2010 at 05:46AM

Mike Nelson

Wholesaler · Richmond, Virginia

217 posts
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Icon_minipost Oct 23 '11, 06:15 PM

What do you do if the mortgage is around $2100k and the rent in the area is around 1600k? Do you as the seller to take a loss?

Mike Nelson

Wholesaler · Richmond, Virginia

217 posts
1491 Influence
4 Awards

Icon_minipost Oct 24 '11, 08:33 AM

Dave - the house is only two years old, would your opinion change on a property like this?

Marv Rousselow

Real Estate Coach · Scottsdale, Arizona

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Icon_minipost Nov 13 '11, 09:58 AM

I am a real estate broker is multiple states but only to advance my investing career, the contract I use is the one used by realtors in each state. There are three forms a lease, a option to purchase and a purchase contract, I have one set of paperwork I do with the seller and a separate agreement with the buyer with a different set of terms.

Please make sure you are prepared before you start investing, it is vital to have a strategy with an exit strategy and make sure you have backups along the way in case there is a problem.

John Jackson

Real Estate Investor · North Richland Hills, Texas

66 posts
393 Influence
2 Awards

Icon_minipost Nov 20 '11, 04:44 PM

There are 3 main Option strategies....
1) ASsignment or Cooperative assignment
2) Sandwich
3) Straight or Pure Option
For the Sandwich, you will want 2 sets of docs. the Lease with Option to Purchase docs between you and the seller, and then the Lease and separate Option toPurchase docs between you and your buyer.
I won't go into all of the reasons why here, but if you are looking for docs, then you need more than docs....you need GUIDANCE.....
You need someone to hold your hand...not in a gay way..but in a helpful way...thru the process....I only do the assignments, but, Brian, who commented above does sandwich LO's I believe, or you can go to naked investor and Michael can help.
Having said that...I'm sure there are 20 people on this site that would love to sell you their latest course on sandwich LO's....
I'm not a big fan of sandwich LO's...mainly because I can't freakin spell sandwich...
God bless spell check.....