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Should I Do a “Sandwich” Lease Option?
Joe: Hey, it’s Joe. This question is from Ryan. Ryan says, “How do we structure a lease option where we do not stay in the middle of the transaction as an assignment, where the end buyer gets full credit for the purchase price when they go to exercise their option to purchase and refinance into the deal?”
Joe: Well, there’s a lot of ways that you can flip properties like this. You can either flip for cash or you can flip on terms. So if you understand the zero down structures, and I’ve got videos on these if you go to my blog, there’s a bunch of other videos that talk about the different structures like subject to, multi mortgage, land contract or contract for deed, lease option or assignable cash deals. You can assign every one of those types of deals, except for subject to. Subject to you have to keep yourself.
Joe: But the other types of deals, contracts or lease options or assignable cash deals, are all assignable deals and you can get your property under control, simply with a purchase agreement or we use what’s called the lease option memo to do the for rent method and take a property that we say we’re going to buy on a lease option and we’re going to assign our right to buy to another buyer and we take control. We become a principal in the transaction. It makes it legal for us to sell the property because we’re a principal in the transaction even if we don’t have a realtor’s license. I have a broker’s license, I’ve had one for thirty years, but you can do this without a broker’s license as long as you become a principal in the transaction.
Joe: And that document will make you a principal and that makes it possible for you to then go out and find another buyer, sell it to them, assign your right to buy to them and then they can buy it at the purchase price that you negotiated originally with the seller. So that’s it. I mean, it’s pretty straightforward. It’s pretty easy to do. And it’s the basis of everything that I teach. So learn how to do this process and it’ll make you a lot of money.
Joe: All right. Good luck.