I'm new at investing so looking for clarification from some of the more seasoned investors.
With your traditional sandwich lease option, I’m assuming that when it comes time for the buyer to close, the investor (me) needs to do a double or simultaneous close, correct? So, specifically, I will need to qualify for a traditional loan and close with the seller and then immediately close with my buyer.
My concern is that I cannot currently qualify for traditional financing so that pretty much leaves it up to my ability to get private money to complete the close or limit myself to only assigning lease options. Would you agree?
If you do not have the ability to finance traditionally with A bank then don't do sandwiches because you are going to lease option with the seller and then you are going to sublease and suboption
Instead find sellers that have very little equity and help them do a lease option, get licensed in Connecticut, and help them with a lease option assignment, where you enter into a lease and option with your LLC, an assignment for a fee
Double closing may not be needed.
Assigning/selling the option to purchase to your end buyer if your contract terms allow, could occur in one closing.
Have a seller carry back/subject-to conversion in your contract terms.
A master lease allows you to lease to the tenant-buyer. A separate option can be assigned to the tenant-buyer for your fee, at that point you are not going to closing, the tenant buys directly from the seller. :)
Thank you all for your responses.
Brian, would you mind elaborating on getting my license? My only concern with getting my license is that I'll need to work under a broker. Working with a national broker would bring credibility, however, I doubt most will be gung-ho about assignments and options. My guess is I'd need to work with a small boutique.
In your opinion, what is a fair split for me to negotiate with my broker to keep as much as possible in my pocket?
Why can't you just find a transitional lender that will spot you the needed closing amount and charge you a point or two for the privilege.
Hi Luis - Finding a transitional lender is not a bad idea. I'll look into it. Thanks.
Hi Bill & Ellis - I did want to get back to you both and thank you for your suggestions. I actually have gotten with numerous lenders and attorneys and each have told me that it's flat out illegal to try to assign directly to the end-buyer w/o a license since there's no way to fill out the HUD-1 showing me getting paid an option fee while having it also count as a down payment for the buyer. (I'm fairly certain it also adversely affects their ability to acquire an FHA loan, too.)
What I haven't tried (or discussed with a lender or attorney) is the possibility of assigning back to the seller after entering a sandwich lease option, collecting my fee, and getting out. That's my next step.
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