Sandwich Lease Option

[Alejandro Lozano]

Hi BP fam I am a rookie investor from Chicago and been reading forums on sandwich lease options and I would like to use that as my strategy to begin as an investor and wanted to know if I need a real estate license to do it here in Chicago or if I can do it without a real estate license. Thanks in advance

[Jonathan Klemm]

Hey @Alejandro Lozano - I am also a local investor here in Chicago so great to meet you and happy to connect!

I haven't actually heard of a sandwich lease, would you mind explaining the basic premise and how it works? 

I wouldn't think you need a real estate license unless it is similar to wholesaling and in that case you can only wholesale (1) contract per year in Illinois without your real estate license.

[Curt Smith]

Hi, All,   Read BP's Zero Down and other creative books.  I've done sandwitch LO,  LO,  rent to own (to sell) etc...

Here what I suggest;   Read the BP books.   Go to youtube and search;  lease options,  sandwitch lease option,   THEN;   subject to,  talking to sellers,  finding subject to sellers ...

I will never again buy from a seller on a lease and option!!!   If they are motivated then offer to buy subject to (assuming they have a mortgage).   Its just too risky to assume in a LO with a seller they will takee your payment and then pay the underlying mortgage.  What if they don't?  In subject to I control everything and my risk is largely known up front.

My past deals are subject to and nearly exclusively I'm only looking for subject to deals.  FWIW no seller adverrtises take over my mortgage.  They may reply to your post card;  do you want to sell?  They generally would li,e too get out from under a stressfull mortgage and of course you woon't offer to buy with cash or worse a new mortgage, you'll offer to give them some pocket cash at closing and to take over their payments so they can move oout and get on with their life.

I give out a help guild doc to subject to. connect/pm me. Join your local REIA!!! find REIAs in meetup.org. Local orgs are where experts hang. Best of luck.

[Braden Smith]

Quote from @Jonathan Klemm:

Hey @Alejandro Lozano - I am also a local investor here in Chicago so great to meet you and happy to connect!

I haven't actually heard of a sandwich lease, would you mind explaining the basic premise and how it works? 

I wouldn't think you need a real estate license unless it is similar to wholesaling and in that case you can only wholesale (1) contract per year in Illinois without your real estate license.

A sandwich lease is when someone (likely you as the investor) leases a property (with option to purchase) from a seller, and laterally leases the property (with option to purchase) to another party. You being in between, or the meat of the “sandwich”.

See here for more info:  8 Tips for a Successful Lease Option Sandwich

[Crystal Smith]

Quote from @Alejandro Lozano:

Hi BP fam I am a rookie investor from Chicago and been reading forums on sandwich lease options and I would like to use that as my strategy to begin as an investor and wanted to know if I need a real estate license to do it here in Chicago or if I can do it without a real estate license. Thanks in advance

You do not need a license to implement your strategy.

[Alejandro Lozano]

Quote from @Jonathan Klemm:

Hey @Alejandro Lozano - I am also a local investor here in Chicago so great to meet you and happy to connect!

I haven't actually heard of a sandwich lease, would you mind explaining the basic premise and how it works? 

I wouldn't think you need a real estate license unless it is similar to wholesaling and in that case you can only wholesale (1) contract per year in Illinois without your real estate license.

 @Jonathan Klemm Hi basically you find a seller who is willing to lease you the property with option to buy at around 3 to 5 years and then you find a tenant buyer who is willing to lease the property with option to buy in one to two years. There is more to it but you are subletting the lease and the option to to buy the tenant buyer for a fee. I just don't know if you would need a real estate license in to do that type of transaction

[Alejandro Lozano]

@Curt Smith Thanks for the information. It does make sense to do a subject to but theres also a little more risk with repairs and to start off with little money I think SLO is my best option until I get familiar with those and then move on to something bigger like subject to.

@Braden Smith Thanks for sharing im familiar with how it works just wanted to know if I need a real estate license to do them in illinois. There is where I live and that's where I would like to start.

@Crystal Smith    So I can do as many as I can without a license or am I limited to 1 per year like wholesaling?

[Crystal Smith]

Quote from @Alejandro Lozano:

@Curt Smith Thanks for the information. It does make sense to do a subject to but theres also a little more risk with repairs and to start off with little money I think SLO is my best option until I get familiar with those and then move on to something bigger like subject to.

@Braden Smith Thanks for sharing im familiar with how it works just wanted to know if I need a real estate license to do them in illinois. There is where I live and that's where I would like to start.

@Crystal Smith    So I can do as many as I can without a license or am I limited to 1 per year like wholesaling?

You can assign one contract per year without a license.  What you described in your post is not an assignment.  It's the equivalent of a subletting a lease.  

[Bria Johnson]

Quote from @Alejandro Lozano:

Hi BP fam I am a rookie investor from Chicago and been reading forums on sandwich lease options and I would like to use that as my strategy to begin as an investor and wanted to know if I need a real estate license to do it here in Chicago or if I can do it without a real estate license. Thanks in advance

 I do not live in Chicago, but if you find out they are legal and have any questions please do not hesitate to reach out. I love lease options and enjoy speaking with people about them

[Alejandro Lozano]

@Crystal Smith     Thank you for the clarification. This is how I would like to get started and just wanted to know if it was legal without a real estate license.

@Bria Johnson     I will reach out. Thanks 

[John Warren]

@Alejandro Lozano welcome to the forums! I think you will need to continue honing in on which strategies work for you. All of the strategies mentioned in this forum have worked.... but in a hot seller's market you have to ask why anyone would want to do one of these strategies. You also are looking for a needle in a hay stack here. The only investor I have met here in Chicago who was doing a subject 2 was actually walking away from the deal and letting the seller get foreclosed on... not pretty. Sandwich lease options are even more complicated, so you would have to find the right situation where this made sense versus just doing a different, low down payment strategy.