Sandwich Leases with Short Sale Properties and Cash Buyers.

Be aware that you cannot leaseback a short sale home to the original owner. Every short sale regardless of lender requires the "arms-length transaction" certification that has wording like below:

"The Buyers and Sellers nor their Agents have any agreements written or implied that will allow the Seller to remain in the property as renters or regain ownership of said property at any time after the execution of this short sale transaction. None of the parties shall receive any proceeds from this transaction except the sales commission."

We're not going to re-least to original home owners, but group of people I selected with help of a realtor and mortgage broker, but on the buyer and seller part, what's the best agreement form to use to help protect myself and rest of the members of this type of transaction? I'm very interested in learning this technique of investing because I would be able to help new home owners and make some money too. Any advice or sharing techniques will help us greatly.
Very Humble but Thankful,
Sidney Brown.

Kudos to you Sidney Brown for not only assisting new home buyers but also educating them on credit matters- an area that holds so many secrets and holds so many potential home owners financially captive!

sandwich lease can be a great investment strategy, a win-win-win!
I'm just wondering how you are finding sellers who are willing to lease their properties instead of selling them since the market is now changing?

Thanks for sharing!

I'm helping some home owners who are in deep debts in their mortgage and most of the properties I am finding are with help of a realtor and broker. Some properties are REO's from banks looking to sell off at deep discounts. It's my first time doing this kind of investing, but wanting to do because it would many people and still make profits for me and all who are involved. The tenant buyers are from realtor and broker I'm working with and they need some credit help buying a house but have good enough income to buy a property.

Sidney,
We love and do lease options. We actually got started doing sandwich lease options. While we love to partner with other investors I am not quite sure you need them in this type of deal. When we do a sandwich lease option we find a motivated seller(not a short sale) and get the home under contract with a lease with the option to buy. We than find a lease option tenant/buyer that we put in the property. If we give our motivated seller $1000 down for the option and pay $800 per month for rent and lock in the sale price for $80,000, We will than get $5000 down for the option from our tenant buyer, charge them $1000 per month rent and give then a sale price of $100000.
So you have no money out of your pocket and you control the deal. You make money at the start with the additional option, You make monthly cash flow and you make money at the end. Win-Win-Win
John W

Search adds for rental properties. Some of these properties are for lease because they could not sell. If they are investors just renting than maybe you can add them to your buyers list and wholesale them properties in the future.
Success to All!
John W

To clarify things for newbies and others unfamiliar with the sandwich lease option, I have a question: Does the monthly lease payment go directly to the homeowner/motivated seller or would both payments be better to go to some kind of escrow account and distributed from there? This is assuming there is still a mortgage on the home. Thanks for an interesting thread as I consider expanding my REI horizons.

With gratitude

Patrick

Patrick,

If you are concerned that the mortgage isn't getting paid, you can write the contract with the seller that your rent goes directly to the mortgage company.

Julie

I've never even considered sandwich lease options. This was great info and sounds simple enough with the kicker "no money out of pocket"! Thanks for sharing!

Hi, I'm Nancy Schlachter, as a 'new' investor, I find these posts on sandwich leases very helpful and informative. These strategies seem like a great way to begin my investment business. I just attended one of Dean's three day workshops, and now I'm "flying by the seat of my pants" with the help of Dean's book, "30 Days to Real Estate Cash"

Such a great post. I'm starting to consider doing sandwich lease option:)

TC

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