New Year and New Beginnings with Cooperative Lease Options

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The New Year is right around the corner, and it begins with everything you need to close your first deal in the first 30 days of 2021! Nothing gets you off to a faster start than cooperative lease options! And the big bonus is that it leads directly into sustainable full sandwich lease options that pay you for years to come!

Using time tested and standardized contracts and forms let you insert your information once to reuse it deal after deal.

 Your Cooperative Lease Option Timeline (Checklist)

Make 2% to 5% on cooperative lease options. There are three primary goals when flipping these deals.

  1. Simply flipping deals quickly for fast cash!
  2. Make quick cash on deals that don’t have enough equity for you to stay in long term.
  3. Other deals you don’t want to stay in (when you’re too busy with bigger sandwich lease options).

For every cooperative lease option, especially when getting started, the most important form to closely follow is the checklist. This is how you walk step-by-step through the easy to follow process to be sure you don’t miss anything. The checklist is also a valuable tool even after you have plenty of experience with sandwich lease options. While you focus your attention on more profitable deals, you can have an assistant work on the cooperative lease options by following the checklist.

Even if you are not yet working with an assistant, but are busy with other deals, the checklist keeps you on track to collect a fast and simple bonus paycheck from a cooperative lease option.

In real estate, “Time is of the Essence.”

Cooperative Lease Options Lead to Sandwich Lease Options

With a cooperative lease option, you are in and out of the deal very fast. You don’t babysit the tenant-buyer. You don’t have to spruce up the property. You don’t collect rent checks from tenants and write checks to the seller. You don’t have to make sure they maintain the property. You don’t have to check in with the tenant-buyer to be sure they are making progress towards obtaining a loan to finalize the purchase.

Cooperative lease options eliminate most of your responsibilities but still deliver a healthy payday!

As you’ve probably read in my previous blogs, the cooperative lease option is the one-payday technique that gets you started towards the three-paydays that come with sandwich lease options. With the cooperative lease, you collect a healthy fee (4-figures or more) by flipping the option to a tenant-buyer that works directly with the seller through the remainder of the lease option process.

You don’t have to work the back end of the deal with the tenant-buyer. But as soon as you master the front end of the process, you are ready to move on to full sandwich lease deals that have three paydays!

Cooperative Lease Options for the Option Fee

This version of the Cooperative Lease Option works well when the seller doesn’t leave much meat on the bone for you (the investor) to stay in a sandwich lease option for two or three years. Sorry to say but this could also be a time when the seller is being greedy. More likely, the seller just doesn’t have enough equity in the house to afford to share with you in exchange for your knowledge and expertise. But greed is greed and you should always be very cautious when working with a seller motivated by greed. Your better deal is when the seller needs to sell a house but just doesn’t own enough equity to be able to share.

Cooperative lease options are about finding a buyer that wants a lease option and connecting him or her with a seller wanting the same thing. You are the middleman flipping the lease option to the buyer for a fee. An example of a seller without enough equity to share is when the seller’s mortgage balance is equal to the sales value of the house. For some reason (divorce, job relocation, illness, etc.) they need to sell the house but will be stretched to pay off the mortgage at the current value of the home. This is a time the seller is motivated to make a creative sale because they probably can’t afford to pay a Realtor® commission either.

That means the seller welcomes having a tenant-buyer to generate rental income that is higher than the mortgage payments until the tenant-buyer qualifies to complete the purchase (the seller gets some extra income until the deal closes). The tenant-buyer is also willing to pay top dollar for the house, which helps the seller pay off the high mortgage and also put something in his/her pocket.

This is a win-win-win for the seller, you as the investor, and for the buyer.

What you are doing in a cooperative lease option is bringing the seller and tenant-buyer together for a lease option and you collect an option fee from the tenant-buyer but then you step out of the deal. The seller and buyer complete the sale before the end of the option period.

How to Structure Cooperative Lease Options

This might seem more complicated than it is. It’s really very simple. This is nothing more than a creative solution that most people never think about. First, you use one of the many methods I share to find a seller in a bit of a pickle who needs some help with this type of creative selling.

Then you explain, in a general way, how a lease with an option to purchase works. What’s important here is that you do gain some control over the property. You do this by signing a purchase option agreement between you and the seller for some “consideration.” When it comes to a cooperative lease option, you want the option fee you pay the seller to be very small. Typically, between $1 and $10. This is important because your profit comes from the much higher option fee that you collect from the tenant-buyer. If you pay too much to the seller, the tenant-buyer fee will only be reimbursing you rather than earning you a decent fee in exchange for your work and knowledge of how to put the deal together.

The purchase price you have under contract in a cooperative lease option is the same price you offer the tenant-buyer. What you want from the tenant-buyer is the full “traditional” option fee. A traditional option fee is between 2% and 5% of the purchase price. At 3% on a $200,000 purchase price, the option fee you collect is $6,000. Once you collect the traditional option fee, you “flip” the purchase option agreement (you paid $1) to the tenant-buyer.

After collecting your full option fee, you step out of the deal.

Time is of the essence! Get started today with cooperative lease options to quickly advance your real estate career in the New Year!

  1. Investing In Real Estate with Lease Options.
  2. Advanced strategies for Buying and Selling with Lease Options.
  3. Your Wealth Building Arsenal.
  4. Add Personalized Coaching.
  5. Cooperative Lease Options.
  6. Expand to Get the Deed “Subject To.”
  7. Round it all out by Working with Realtors.

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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