Updated over 10 years ago on . Most recent reply
1st "Sandwich" Lease Option Completed
My background....buy and hold investor with 43 units.
I recently got a lead from direct mail that just didn't make much sense to buy and hold as a rental. So I made the owner a 5 year lease option offer at $475 month with $50 a month going towards my purchase. Which he accepted.
I then signed a "sandwich" lease option with a couple that has been renting an apartment from me for the last few years. They have paid great and I since I feel this to be a low-risk deal, it's thinner than I would've made it with an unknown/new tenant. Their option price is $2500 higher than mine. I paid nothing to the seller for my option. My tenant is paying $600. Their monthly rent is also $600 with $50 credit towards their purchase. They're responsible for all upkeep. So I'll clear $125/month on it and make a little on the back end as well.
As far as the exit goes, they'll either get financing within their 4.5 year option period or I will then and then sell to them on land contract. If they decide to not buy the home I will exercise my option and either rent it or sell to someone else on land contract.
While it's not a hugely profitable deal, it feels great to create a new cash flow from nothing. Aside from changing the locks I have made no repairs and didn't even have to switch the utilities to my name!
Now it's time to do another one with bigger margins!
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@Brandon Hicks sounds like a good deal. Congrats.