Sandwich Lease Option

[Reed Starkey]

@Brian Gibbons@Bill Gulley

I recently began direct marketing to find deals to rehab.  In this process I found a deal that is probably a great SLO.  I admit, I have been so focused on Flipping, that I never took SLO seriously.  Anyway, here is the deal.

Michigan Condo in good school district.

HOA $210

Owners Mortgage balance $100,000

PITI Payment $1100

Currently Rented for $1200/mo

Property Management fee $120/mo

Comps at $165,000

Obviously the Out of State owner is negative cash flow, but could probably sell this thing pretty easy with the equity in the place.

Could I offer the SLO to her at:

$1,310/mo lease (to cover her expenses) 1 yr lease with 2 extensions

$1000 for the 3yr option consideration

Option to buy at $135,000 to $145,000

Then sell the option as follows:

Option to buy at $165,000

option consideration $8250 (5%)

monthly lease payment of $1400-$1500, (This is FMV for rent in this area)

I tried to keep this thread to just the details.  Please let me know if I should adjust any numbers in this equation.

I am a licensed RE professional in the state of Michigan.

I will have my RE attorney draft all agreements, so the legal is covered, just looking for structure.

Also, if this deal looks like it would be better for another option other than the SLO, let me know your opinions on that as well.

Thank you!