Sandwich lease options have a big advantage when it comes to how to find a seller now. Real estate investing has so much upside today that at first glance it appears all of the decent investment properties are being snatched up the moment they come on the market. And that is true if you are using one of the highly competitive investment strategies. But sandwich lease options give you an investing advantage… especially in this competitive market.
All of the other investors are looking for either rental houses as an owner/landlord or rehab properties that can be flipped. You are not looking to become a traditional landlord nor are you interested in a lot of rehab hassles. You want to control houses through sandwich lease options without owning them.
How to Find a Seller Now Using a Simple Formula
This is about your bank account, so you should go into any deal with your eyes wide open to how much money will be coming your way. After all, how to find a seller now is really all about how much you’ll earn.
The formula is a simple numbers game. The lease options you are looking for should provide you with about 15% equity above what you will offer the seller. You’re going to make the seller an offer to purchase at a specific price and then you are going to find a tenant/buyer at a higher price. The price spread you want should be around 15%. Don’t get completely locked into that number because there are other considerations but it is a good starting point. For example, if you can sell to a tenant/buyer for $230,000, you want to be able to buy for about $200,000.
Understanding the cash flow is also important. Cash flow is about the rent you’ll be collecting from the tenant/buyer minus what you pay the seller each month. A cash flow spread of about 20% to 25% is what you want to aim for. If you’ll be paying $1,100 a month to the seller, you want to be able to collect $1,375 from the tenant.
If these numbers aren’t making complete sense to you, you may want to take a look at “Investing In Real Estate With Lease Options.”
Also, keep your first payday in mind. This is the difference between the option fee you pay the seller in a sandwich lease option and the fee that the tenant/buyer pays to you. This is usually your only out of pocket cost when it comes to how to find a buyer now, so you want to keep your cost at a minimum. But don’t get wrapped up trying to make too much money here because this isn’t typically your largest payday in the big picture. The fee you’ll collect will be 2% or 3% of the $230,000 tenant/buyer price. That means the buyer’s option fee will be between $4,600 and $6,900. A good starting point with the seller might be $2,000 or 1% of $200,000 (or less).
The Basics of How to Find a Seller Now
As a sandwich lease investor, you want houses that are mostly move-in-ready so that you don’t have to spend money on repairs. These houses don’t have to be anywhere near perfect because your tenant/buyer is going to be looking for a decent deal also. A house needing a fresh coat of paint inside is fine but you don’t want one that will need a new roof the next time it rains.
So, find a decent 3 bedroom, 2 bath house with a back yard. And then… how to find a seller now usually comes down to the equity the seller has in the house. You are looking for either one of these situations:
- The seller does not immediately need all of their cash out of the house.
– Or –
- The seller does not have any equity in the house.
Two other common conditions that go along with these are that the seller needs to leave the house or the house is already vacant.
This is About Controlling Property Without Owning it, So….
You need to make the seller comfortable that you are a real estate professional. The reason they need you is that you have the solution they need. First, is your knowledge about the market and the process. You know you can easily rent the house in today’s market. You also know there is a huge hunger from millennials for rent to own homes because they are having difficulty buying a first home. You don’t have to share all of this with the seller but this is where your confidence comes from.
You have confidence that both you and the seller will do well financially. You give the seller confidence that you will pay the rent, whether the house is vacant or not. You are offering him cash right now with the option fee on a house in which he has little or no equity. You will control the property without owning it. You are solving the seller’s most urgent problems. This is key to how to find a seller now.
Your offer is what I call “Good Debt Relief.” You must understand what you bring to the table so you can explain it to the seller. She or he needs to understand what’s in it for them.
Good Debt Relief is pretty simple. The seller has an already vacant or soon to be vacant house they have to make mortgage payments on. Or they can no longer make the mortgage payments even if they still live in the house. The house is not producing an income. The debt payment is a big rock they have to carry without relief. When you offer a lease option, you offer an income stream to pay that debt, which is Good Debt Relief.
How to find a seller now requires you to be the hero. Show them that you are a confident real estate professional. Know what you are talking about and look them in the eyes. Dress well and talk clearly. You can even use phrases like, “If your house qualifies…. I can do something good for you right away.” Carry a briefcase with the lease option forms so you can close the deal on the spot. If you don’t already have all of the knowledge and skills you need, you can learn them:
- You learn the basics: Investing In Real Estate With Lease Options.
- Next are the details: Buying and Selling with Lease Options.
- Create your Wealth Building Arsenal.
- Personalized Coaching.
Being a top-performer with lease options means knowing all of the alternatives available. As you uncover unique situations, you need specialized tools and methods that include:
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.
If you found this information useful, please visit again soon at wendypatton.com.
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