Sandwich Lease Options - This is Everything you need to ...

Sandwich Lease Options

Your Complete Guide to Buying & Selling on

Lease Options eBook

Wendy Patton

? 2011

Table of Contents

Introduction Lease Options: Anyone Can Do It! .............................................................. 3

CHAPTER 1

How Sandwich Lease Options Work to Get You to Future Financial Freedom (FX3) ..... 8

CHAPTER 2

Success Stories of Sandwich Lease Options ................................................................ 16

CHAPTER 3

Finding Motivated Sellers for Lease Options ................................................................. 20

CHAPTER 4

Evaluating the Profitability of the Deal ........................................................................... 29

CHAPTER 5

Negotiating the Deal: Steps to Buying on Lease Options .............................................. 37

CHAPTER 6

Getting the Paperwork Ready for a Sandwich Lease Option ........................................ 48

CHAPTER 7

Advanced Concepts and Strategies for Buying on Lease Options ................................ 58

CHAPTER 8

Building Rapport and Sharing Lease Options with Realtors .......................................... 65

CHAPTER 9

Closing Deals with Realtors .......................................................................................... 76

CHAPTER 10

Finding & Qualifying a ¡°Good¡± Tenant Buyer ................................................................. 84

CHAPTER 11

Getting the Paperwork Ready for the Tenant Buyer ...................................................... 94

CHAPTER 12

Managing the Property and the Tenant ....................................................................... 108

CHAPTER 13

The Simultaneous Closing / Double Closing ¨CThe Big Payday ................................... 117

Chapter 14

Advanced Concepts and Strategies for Selling on Lease Options .............................. 117

CHAPTER 15

Business Organization for Lease Option Investments ................................................. 125

Resources for the Real Estate Investor ....................................................................... 133

? 2011 Wendy Patton

Page 2

Introduction

Lease Options: Anyone Can Do It!

F

ourteen-year-old John and his father attended a seminar I spoke at in Houston several

years ago. During one of the segments of the presentation I usually teach my students

how to call sellers directly out of the newspaper or from Craigslist. When I teach this part

of the class I make live calls to sellers for the benefit of my students so that they can hear what I

say to the seller and how I gather information to determine whether or not their home is a

potential candidate for a lease option. On this day, however, I didn¡®t even make any calls ¨C we

were simply talking about best techniques for calling leads.

The next day, while John was in school, he began circling the ¨DFor Rent¡¬ ads. After

school he started making calls and followed my script ¨C with no caller training ¨C and he got a

seller lead for a lease option who said ¨Dyes¡¬ they¡®d like to consider it. However, being only 14

and having no experience, he couldn¡®t and didn¡®t know how to enter into a legal contract. He

went to his father and said, ¨DWhat do I do?¡¬

John ended up selling the lead to another investor in their local investment group for

$500. He gave me a copy of his $500 check. Not bad for a fourteen-year-old kid and one to two

hours of work. John immediately went on to develop a relationship with a local investor, and on

his next deal (while still 14!) made 50 percent = $14,000 - of profit for his assistance in the deal.

He has since done additional deals for much higher profits.

How and why can a fourteen year old kid do this and yet most adults would not? Is it fear

of the seller saying no? Is it fear of the seller saying yes? Either way it is FEAR! We are afraid

of failure. I believe we all have fear of failure and/or fear of success. At fourteen, he was not

afraid of failure. Heck, he probably hadn¡®t even been dumped by a girl yet ?. He just applied

what he learned and tried it. When you know what to say and when to say it, it makes it so much

easier.

You are never too old or too young to start investing. If you can do the research and pick

up the phone to make the calls, you are on your way. However, many of us stop before we even

get started because of fear. We let that get in our way of success. We might have excuses of:

¨DI can¡®t possibly do that.¡¬

¨DIt¡®s a young person¡®s game.¡¬

¨DIt¡®s an older person¡®s game.¡¬

¨DNo one will say yes to me.¡¬

¨DI have no experience.¡¬

¨DI don¡®t have a good voice.¡¬

¨DI don¡®t have money.¡¬

¨DI don¡®t have good credit.¡¬

Insert yours HERE¡­

All are negative talk and incorrect statements.

? 2011 Wendy Patton

Page 3

What¡®s going to make you successful with lease options? Taking the plunge! One of my

favorite sayings is: Smart and Successful People Take Action Now and in the Present Moment.

You¡®ll make some mistakes along the way, but so what? As long as you can get over the ¨DI¡®m

okay with myself if I make a mistake,¡¬ then what¡®s the worst thing that can happen?

John wasn¡®t hampered by fear, and so was able to jump in, take the plunge and make

things happen -- setting his financial future in motion. His example is by no means a huge

amount of money, but nothing to sneeze at either. It is a fantastic amount for most people and

extraordinary for a 14 year old. The money is not only important because John can now pay for

college, but now John has choices. If he continues on his path in real estate investing, he will

have the possibility of being independent and working for his own interests, unlike most of his

friends. Choices are freedom!

For me, the most exciting facet of real estate investing is Future Financial Freedom - or

as I call it - FX3. Everyone has different definitions of freedom. For some, it is financial; for

others, it means having more control over their time. Let me have one of my BootCamp students

explain this in their own words to you first:

Dear Wendy,

Our financial future has literally changed within the past couple of weeks

by applying what my husband and I learned from your BootCamp. Even more

importantly, what we?ve learned from your on-going, personalized support ¨C you

truly are the best! Keep in mind, my husband thought that I was crazy when I

signed us up for your BootCamp and flew up from Florida to Michigan to hear

you speak. It truly was the best thing we have ever done. Please share my

personal testimonial with your classes. I?m a believer, this does work!

First off, I have to mention when we attended your seminar we had just

completed a 1031 exchange, which gave us the great opportunity to start our

investing career by buying 3 houses. Yes, it was so great having 3 houses sitting

empty and one with a renter that lived off of us for free! This renter was so nice

she gave a whole room to her pet rabbits to roam freely in after we had just rehabbed the house!!!

During the BootCamp my name was drawn to purchase a house on a lease

option. Yes, I jumped for joy like I had just won a prize. The next day after the

Coronas wore off I figured out what I had just committed to ¨C a house that is a

1,000 miles away, where it actually snows, the pipes freeze, and they have things

called basements! Yes, being from Florida this is just what I?ve always wanted NOT!!! We were up for the challenge and Wendy made it so easy with her support

along with the great contacts and help that we had from others who attended the

boot camp. Not only did we get a great purchase price and terms with the owner,

but today we have a pending contract for a lease option that will cash flow us

? 2011 Wendy Patton

Page 4

$600 a month and at the end of the 18-24 month term we will profit $107,400!!!

Gosh, I guess that will cover the cost of the class ¨C TRULY AMAZING!!!!

When we came home from Wendy?s class we decided no more renters. We

turned around booted the bad renter out, (and no we didn?t keep the rabbits!) We

sold all of our houses on lease options. So my 3 houses we had sitting empty, we

now cash flow $700 monthly and we will profit within 18-24 months,

$227,900!!!!!

Now comes the best part . . . I finally put Wendy?s class to the test. I went

out and found an owner that was willing to do a lease option with me. Every

Realtor I spoke to, (and many investors as well), told me no one in their right

mind will do a lease option with you in this market. The Florida market is way too

hot. They are right. It is hot. Appreciation in some of our areas is anywhere from

34-40%. I got a gorgeous house that looks brand new on a lease option. I also got

a killer deal on the rent at $950 a month ¨C normal rent would be $1425! I did put

$5,000 down which will come off the purchase price. They were asking $200,000

and it?s worth $239,000, so I offered them $210,000. The terms are 14 months,

enough time to refinance it if I have to. My new tenants bought it on an 18-month

term. We will cash flow on a monthly basis $845.00 ($500 of that will be applied

towards the purchase price) and we are selling it for $299,900 ¨C that is a profit of

$89,900. Amazing, is this for real??? I?ve since quit my job and I?m doing this full

time. Thank you again Wendy for changing our lives!

D. and E. Larson

Why I Chose Real Estate

Deal making may just be in my blood. I¡®ve always loved a deal, and the day I realized

real estate investing was that kind of game was the most important day of my life. My first

house was a three-bedroom bungalow in a suburb of Detroit. I had just moved into town for a

corporate job and there was no housing available¡ªI lived in a hotel with all the other corporate

recruits. My PITI (principal, interest, taxes and insurance) was $438. I rented two bedrooms to

two friends from the hotel for $250 each. I had cash flow and I was living free! My $62 cash

flow per month paid my credit card payment. I was 21 years old and I thought this was pretty

cool! So I decided to do it again. I did that three more times that first year. I had no money or

assets, but I did have credit cards (which I do NOT recommend using for real estate).

At the start of my real estate investing career, I was $20,000 in debt with student loans. In

my mind, the worst thing that could have happened was that I would go bankrupt. However, I

had good credit and was able to make my down payments on homes with credit cards. It wasn¡®t

long before I had a credit line of over $250,000 ¨C and too many credit cards. Using credit cards

should be the last resort for most investors as I lost a lot of profit by having huge revolving credit

card debt ¨C even though I faithfully made payments on all of them and somehow juggled them so

that no payment ever slipped through the cracks! It was, however, an administrative nightmare.

Still, I couldn¡®t focus on that. I had to focus on what was the best that could happen. I could end

up with FREEDOM and CHOICES!

? 2011 Wendy Patton

Page 5

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