Sandwich lease option and upfront out of pocket expenses?

Question

In what order do you use lease option paper work when you are doing lease options? What are all the out of pocket expenses the investor needs to pay the seller/landlord? How fast can you find a tenant buyer to cover your costs to the seller, so you won't be on the hook to pay those expenses?

Jay Hinrichs · Answer

this is what your attorney is warning you about.. you record the option and your buyer defaults takes a full blown foreclosure to remove that cloud.. if they wont do it voluntarily .. so they squat and your screwed the seller sues you for non performance

Tony Marcelle · Answer

I have a cooperative lease option agreement that outlines exactly what I plan to do which does tell the seller I will be assigning be the contract to another buyer. As long as the seller is on board with me doing this then I be am good to go.

Corey Woodman · Answer

@Tony Marcelle

2 out of the 3 houses im doing a SLO with are with a local attorney in my town. SO I highly trust that he WILL make the payments. I had him give me authorization to access the mortgage company so I can verify he is making payments each month. I have another paragraph saying if he is even 1 day late, I will make payments on behalf of him and he forfeits his right. Which in my experience sellers are relieved to see that they're not going to be getting screwed. You have to take everything on the standpoint of helping others and protecting them, you and the banks.

I think assigning a lease option breaks the trust between you and the seller. They're doing this to get away from being a landlord, sandwich lease options are the only one's i want to do. If you tell them hey I'm going to find a tenant buyer and manage the whole transaction then say oh can you sing this general release so I can assign them back to you, if it were me I'd be a little pissed. Best to be 100% upfront with them on the initial phone call letting them know you may be assigning a tenant to them for a fee that comes to you if that's what you plan to do. Plus if you do SLO's, that's how you get bigger wealth

Jacob Anderson · Answer

@Tony Marcelle I only use a lease option if I am the buyer (keeping the property). I know that I won't default.

@jay

@Jay Hinrichs It's good to hear from you, I always value your intake. Thanks

Tony Marcelle · Answer

I don't think I can go the sandwich lease option route if that's going to happen.

Tony Marcelle · Answer

I had to get some legal advice before considering doing this, but my lawyer was quite cautious about getting involved in sandwich lease options. I would probably be better off just assigning the lease agreement to another tenant buyer and leave.

Corey Woodman · Answer

I have in my contracts that first months rent/Option fee is due upon the assignment of a tenant buyer. That was there is no upfront out of pocket fee. I also have that after 90 days if no tenant/buyer is found the contract is null and void and at any time during those 90 days, if the seller finds a buyer he can sell. But i ask that he does not rent it out during my 90 day marketing to give me a fair advantage since I'm lookng for a higher quality tenant/buyer then just a renter.

Tony Marcelle · Answer

@Jacob AndersonUnfortunately, I do not have an online portal. I have to do mine the old fashion way. I heard some people say the option to purchase contract has to be recorded at the county recorders office and that it is done to cloud title. Is that true? If so, how does a person uncloud the title? By the way, it's no problem you did not add my name.

Jacob Anderson · Answer

I forgot to put @Tony Marcelle

Jacob Anderson · Answer

The purchase I just mentioned above was with another investor. It was actually one of the easiest transactions that I've done. Investors already know what is to happen and they are not unrealistic (or think their property is worth more because of the work that they did or personal sentimental value). We just used an online portal through the Broker to sign the paper work. We dropped off a check and viola, the deal was made. We each have the option to print or just save the file as a PDF. When the actual purchase takes place then it will be with a title company just as if we were buying any other property.

Sandwich lease option and upfront out of pocket expenses?

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