Real Estate Agent · Bloomington, IN · Member since 2016 · 62 posts · 19 votes
I'm studying this new strategy and trying to find whether it is required to be licensed to do a sandwich lease option in Indiana. I've found a couple very old posts that suggest you need to be licensed to execute any kind of sandwich lease . I've also seen old posts that suggest there's a limit of 12 units I can lease out before I'll be required to obtain a managing brokers license. Can anyone shed some light on this?
Is it required to be licensed to perform sandwich lease options in Indiana? Is there a limit of 12 total that I can own before the law steps in?
The best answer to figure this out is to seek legal council and confirm with them if it can be done with or without a license, as well as have them draft the proper agreements
This is one of those “it depends how you structure it” answers.
In general:
If you are leasing and then subleasing property you control under a valid lease, you are acting as a principal, not as a broker. In that structure, you typically do not need a real estate license because you are not representing someone else for compensation.
Where people get in trouble is when:
• They are marketing or negotiating on behalf of the owner
• They are collecting fees to place tenants for someone else
• They are assigning contracts without equitable interest
• They are advertising in a way that looks like brokerage activity
That is when licensing requirements can trigger.
As for the “12 unit” rule, that usually relates to property management licensing thresholds or specific state statutes about managing properties for others. Owning 12 properties yourself is very different from managing 12 properties for third parties.
Key distinction:
Own or control the property = principal
Represent someone else for a fee = broker activity
Indiana Real Estate Commission rules are what matter here, and they can be strict on what constitutes “acting as a broker.”
If you are serious about scaling this strategy, I would:
Structure it so you always have equitable interest
Avoid marketing yourself as placing tenants for others
Confirm with a local real estate attorney, not old forum posts
One wrong structure can turn a strategy into an unlicensed brokerage issue fast.
The best answer to figure this out is to seek legal council and confirm with them if it can be done with or without a license, as well as have them draft the proper agreements
In Indiana the clean answer is you do not need a license to lease out and manage your own stuff, but once you start doing sandwich lease option style deals in a way that looks like you are brokering for someone else or getting paid to put deals together, you can drift into the part of the law that says you cannot negotiate leases options or sales for consideration without a license. That old 12 unit thing is real but it is not a statewide limit on how many you can own, it is a narrow exception that lets someone rent and manage up to twelve apartment units on one parcel or contiguous parcels without needing a license, basically a small self managed apartment setup. If you are serious about doing these in Bloomington or Indy, run your exact structure past a local real estate attorney so you are crystal clear before you market anything.
If you want a second set of eyes, Investor Edge Concierge can help you sanity check the deal flow and point you to the right local pros so you stay on the right side of the rules.
