I’ve written extensively about sandwich lease options where you make a minimal investment but get paid three times – an option fee when you sell the house, a monthly income during the lease period, and a profit when the house is bought in the end. Another version is 
cooperative lease options also know as wholesaling lease options. Using this version, you won’t make as much money but you will make money faster.
This version is typically best suited to the beginning investor that has little operating capital although any investor can use it when the opportunity presents itself. Essentially, you still need to find another buyer. If it’s another investor, you’ll need to wholesale by leaving meat on the bone for the investor. But it could be an end buyer that you sell to for full retail.
Getting Paid for Cooperative Lease Options
In any scenario of the cooperative lease option, you only get paid once compared to being paid three times in the sandwich lease option. In the cooperative lease option, the way you get paid is by reassigning your lease option to another person and charging more for the reassignment than you paid for it.
This is faster and easier than a sandwich lease option. In the sandwich lease, you’re in the middle of the deal until the end buyer makes the final purchase. In a cooperative lease option, you are in and out of the deal quickly. No need to semi manage the property until the purchase is made. As with most creative investment techniques, there are multiple ways of setting up the deal.
Cooperative Lease Options are About Flipping Lease Options
With cooperative lease options, one of the most common is that you arrange the original sandwich lease. The original contract must specify that you can reassign the contract. Then, through your networking efforts with other investors, you find another investor that has an end buyer looking for a lease option. You have the house under a sandwich lease agreement but another investor has the end buyer. You essentially flip the sandwich lease to the other investor that ultimately puts an end buyer in place.
It is important to remember when doing a cooperative lease option NOT to find the buyer for the seller. It might sound like you are doing that and in essence you really are, but you can’t describe it that way or explain it that way to your buyers and sellers. You are the buyer and you are “assigning” your contract to another buyer for a fee from them to buy your contract. For example, I usually take the buyers option fee as my assignment fee for a wholesale lease option. This can be anywhere from $2500-$10,000 in my area of the country. Can you use an extra $5000 this month?
Another Way to Write a Cooperative Lease Option Agreement
One of the best things about being a real estate investor is your ability to write contracts in many creative ways. A more profitable version of the cooperative lease option is for you to have the end buyer. You keep the contract in place between you and the end buyer until he or she is ready make the final purchase. But maybe you aren’t able to keep up your end of the sandwich lease purchase in the end. Who knows where your finances might be two years down the road?
You might have to bring in another investor to assign your lease option to and he or she makes the purchase from the original seller and then sells to the end buyer. In that scenario, you are able to collect the higher lease option fee from the other investor and the higher rent until the final purchase is made. What the cooperative lease option does is flip to the other investor the difference between your agreed to purchase price and what the end buyer is paying.
Real estate investing is all about finding creative solutions that work for you and others.
By Wendy Patton
For more than 30 years, I’ve used the Sandwich Lease Option System to earn myself and my students millions of dollars. From my experience, I know there is plenty of room and opportunity in the real estate investment market for everyone wanting to participate to find profitable deals. It’s because of that fact and my personal success that I share the Sandwich Lease Option System with others.
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