Selling Real Estate on Lease Options

In my three decades of real estate investing, I’ve never found a lower risk or more profitable strategy than selling real estate on lease options. I’m completely confident that you’ll be rewarded in the same way. Best yet, when you do this the right way, with a sandwich lease option, it’s a win-win-win for the property owner, you as the investor, and the end buyer.

Selling real estate on lease options using a sandwich option delivers the same three major financial rewards to both you as the investor and to the seller of the property. If you’ve ever wondered why a seller would agree to have you put a sandwich lease option together for them, the answer is because it provides immediate and tremendous benefits for the seller. The seller’s benefits begin immediately when a vacant or unaffordable property begins bringing in income from a property that was a financial drain only a couple of days ago. The property switches from costing the seller money to paying money overnight. That is the number one reason sellers love sandwich lease options.

How Selling Real Estate on Lease Options Pays Investors and Sellers

Imagine you know about a vacant house that you are paying on every month. One the owner  would rather sell than be the landlord of. But selling means the house will probably sit empty for another 3 to 6 months while the owner keeps paying the mortgage, utilities, and other costs – all without a nickel of income. Plus as the seller they will have to spend a few thousand more dollars preparing to sell the house on the retail market. It’s all a dreadful financial drain!

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Imagine the house immediately starts paying a profit to the owner (and to you as the investor). That’s the difference selling real estate on lease options makes – X3. As the investor, you take out a lease option with the seller that immediately pays him or her the option fee plus starts paying the monthly rent (that’s two of the three financial benefits for the seller). You then immediately put an end buyer in place that pays you a higher option fee and higher rent (that’s two of the three financial benefits for you). This all happens within a week or two to turn a money pit into an income stream for both you and the seller.

The third payout for both you and the seller takes a little longer but is the biggest of the three payouts. That’s when the end buyer obtains financing to complete the purchase of the house.

Why Selling Real Estate on Lease Options is WIN-WIN-WIN

Selling real estate on lease options is the quickest and least expensive technique available to investors. As the investor, you don’t have to meet the high and often unreasonable underwriting requirements of banks and other institutional lenders. Owner/sellers require very little documentation from lease option investors. The option fee substitutes for a down payment that the seller immediately puts in his or her pocket – without closing costs and without tons of documentation.

The seller is basically financing the property for the rent money – giving you control without ownership. The seller doesn’t need a bunch of documentation because he or she is still on the title of the house. What they are getting is cold hard cash for a property that was a dark pit swallowing cash a few days ago.

End buyers want lease options because of the little up-front cash required to get into a home they will soon own. The buyer is entering into a contract to purchase the house; he simply hasn't completed the purchase.

As the investor, your goal is paying as low of an option fee to the seller as possible while collecting a higher option fee from the buyer. Sellers willing do this in exchange for the outstanding benefits they immediately receive.

During the option period, the house is appreciating in value. At the end of the option period, the house is worth more to the buyer than you owe to the seller. This builds in an extra profit margin for you as the investor. First, you negotiate a lower selling price with the seller than you will collect from the buyer. After the house appreciates in value for a year or two, the end buyer already has money in the house and is happy to complete the purchase for the higher selling price that goes into your pocket. Selling real estate on lease options is all about controlling the property without owning it!

All other investing methods are about one of two methods – 1. Buy and sell (flipping) or 2. Buy and hold (landlord). Selling real estate on lease options is the only method that combines the best of both to maximize profits when investors both collect rent and sell the property in a single deal. And it gets even better because with that you collect a higher rent that is paid on time, have a tenant who accepts homeowner responsibility, and you have a pre-determined sales price. Selling real estate on lease options is all about lowering your risk while maximizing your profit.

By Wendy Patton

For more than 35 years, I've used the Sandwich Lease Options System to earn myself and my students multiple 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 and 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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2 Responses to Selling Real Estate on Lease Options

  • Bill Your says:

    I have long ago decided this was a reasonable exit plan for the 25 rental properties that I own. I have your book selling on lease options. The biggest issue I see is finding the potential buyer who can make a reasonable down payment/option consideration - maybe 5%.

  • Lou mallia says:

    Hi wendy its lou mallia former vp garden state reia

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