Baby Boomers, Stock Markets, Coronavirus, and Sandwich Lease Options!

WOW! Have you ever been on a rollercoaster ride like we are on right now? I know I never have. I couldn’t be more grateful that I am in the sandwich lease option business than I am at this moment. Unfortunately, I’m convinced that the 73 +plus million baby boomers did not fully grasp the investment risk they were taking with their retirement accounts. There’s nothing like a historical stock market crash to grab the attention of every investor – whether you are in stocks, bonds, real estate, or something completely different.

I would never try to predict what the stock market might do next but I am shouting a warning that boomers shouldn’t be taking investment risks that they don’t fully comprehend. That brings me back to reality because everyone should have a basic understanding of how real estate investing works. If you’ve followed me at all over these many many years, you know that sandwich lease options are not only very low risk and very low cost ways to invest but they also bring other tremendous benefits by providing a steady stream of income as well extra income. The 3 income streams that I regularly write about are lease option fees, monthly rent checks, and a big payout for the final sale.

Sandwich Lease Options for Baby Boomers Provide Full Time, Part Time, and Extra Income

Not a single person can tell you how devastating the coronavirus spread will be, how long it will last, or the total extent of the economic consequences. But preliminary NASDAQ reports are that every American has lost, on average, about $22,000 so far. What do you do now? If you’re a

baby boomer, use this opportunity to reduce your investment risk.

Sandwich lease options are low risk and low cost but they are not an obscure and difficult to understand investing technique. All it involves are the two most basic real estate transactions – renting houses and selling houses. Sandwich lease options are nothing more than a way to combine these 2 basics into a 3-step transaction with 3 paydays. The low risk part is that you control the properties without ever owning them. The low cost part is that you take control for nothing more than the cost of the lease option that you might receive upfront from the tenant/buyer even before you pay the seller. In that case, it is no cost to you. And there are variations such as the cooperative lease option that works great to get you started or if you only want to do this part time when you need some extra retirement cash. If you’re retired with time on your hands (we are staying home), there are advanced ways to supercharge sandwich lease options by putting 2 or 3 deals together each month.

Why Baby Boomers are Investing in Real Estate

I think real estate might be the second oldest profession. Maybe not, but it has certainly been around for a long time. Much longer than electronic gadgets or whatever the next stock market fad will be. And indeed, real estate has survived and thrived much longer than stock markets themselves. So what keeps investors in real estate?

Cash Flow. This is the monthly spendable income that you receive after you pay operating expenses. With sandwich lease options, this is your second payday. It’s what you have for income every month after the tenant/buyer pays you and you pay what you owe to the seller.

Real estate works with your retirement. Not only does it provide steady cash flow but also you receive a type of dividend or bonus every time you begin a deal and again when you complete a deal. This is unique to sandwich leases when you collect a higher option fee at the beginning (first payday) and again when the tenant/buyer completes the purchase for your third and largest payday.

Real estate builds equity. This is attractive to tenant/buyers and motivates them to make the purchase. By the time they have a small down payment and qualify for a mortgage, the house value is worth more than they are paying for it. Equity also attracts sellers because they will pocket more cash as a result of paying down their mortgage for another year or two. You collect a fair fee for putting the deal together. Your largest payday comes from the increased equity rather than out of the pocket of the buyer or the seller.

Real estate is full of tax deductions. During the lease option period, most of the tax deductions go to you as the investor and to the seller. You’re running a simple small business that entitles you to write off all of your business expenses. The deductions can offset income and reduce your overall taxes. You might even want to look into investing directly with your retirement account (self-directed IRA or self-directed 401k) because there are even more tremendous tax advantages using these methods. The seller also continues to reap tax advantage as long as he/she is the legal owner of the house; such as property taxes, mortgage interest, depreciation, and business expenses.

Real estate deals are easy for everyone. By the time you are close to retirement age, you have almost certainly done a few real estate deals. Yes, there is a fair amount of paperwork involved but you’re working with standard rental and purchase phrases, terms, and agreements. You’re using the same mortgage and purchase arrangements that are used every day by millions of normal people. There isn’t any convoluted financing involved or hidden legal small print. These are everyday transactions and the forms in my courses are easy to fill in the blank.

Real Estate is NOT Digital

You can’t feel and touch Wall Street investments. Your profits and losses are nothing more than electronic digits being recorded in spreadsheets by someone else. If you speculate on growth-stocks, there isn’t even a miserly dividend check every three months. When the big board starts flashing red, it means any digital wealth you thought you had, has already disappeared. Importantly, the first word in real estate is “real.” This is a tangible and touchable asset. The next time the big board flashes red, you can still drive by your real estate investment and it will still be sitting exactly where you saw it the last time.

Something very important to think about is the relationship between stock markets and real estate. During the Great Recession of 2008, it was the real estate bubble that brought down the stock markets. The cause was a bunch of greedy banks pushing a ton of high risk and high interest mortgages. That is not the case today. Today’s interest rates are super low and mortgage qualifications have been tight. Just as important is that there are many more people looking to buy houses today than there are houses available for sale – lots of demand for houses.

Zillow has already conducted a study (March 13, 2020) about housing during previous pandemics. What they found was that home sales volume dropped during the pandemic (people staying at home) but the pandemic only put the housing market on a short pause. Previous pandemics didn’t crash the market. That’s what you should be expecting right now. The housing market was strong before the pandemic and has every reason to come roaring right back.

You’re never going to see interest rates this low again in your lifetime. The federal government is ready to get people back to work in the tight employment market. For the huge market of millennials looking to buy a home, renting to own is not an investment, homeownership is the next step in their maturing lives. Low interest rates + high demand means any pause in the real estate market will return with a roar.

Many baby boomers are worried that they won’t have enough money to last until the end of their life. You’ve been beaten up enough times by the stock markets. Now it is time to move out of digital investing and into tangible real estate.


Sandwich lease options make the most sense whether you want to do this full time or part time or occasionally as needed.

I can’t wait to hear about your first deal! Please get in touch to let me know how it is going for you.

By Wendy Patton