[Rafael Vazquez]

Rafael Vazquez

Hi,

I am wondering what is the best way or best practice to follow when it’s time to close on a sandwich lease/option. For example, I buy on a 5 year lease option with the seller. I then sublet these property on another 3 year lease/option.

When my buyer is ready to exercise the option, how is it closed? Do I need to do a double closing? Any other more creative way?

Thx/Rafael

[Anonymous]

Anonymous

Rafael,

Ideally, you should have all the closing documents signed and in escrow with the seller so they don’t need to be involved.

If you didn’t do that, then you need to send a certified letter to the seller that you are ready to exercie your option to purchase and let them know when they need to show up at closing to sign docs or let them know they will get fed ex package with docs on (date)

Hope that they don’t try to back out at the last minute. That has happened a lot with L/O’s that don’t get the docs signed up front.

[Rafael Vazquez]

Rafael Vazquez

Jackie,

Thanks for the reply.

I have not done anything like that yet. I was just wondering because it really doesn’t sound like a good thing to do since it is possible that something could go wrong in the deal between you and the seller and you may not be able to deliver to your buyer.

At least if you bought the property from the seller on a subject-to deal instead of on a L/O, you will have title and you should be able to deliver when your buyer is ready to close.

Rafael

[Greg Christiansen]

Greg Christiansen

Don’t sell. Rent it out instead.

[Rafael Vazquez]

Rafael Vazquez

So from an investor perspective, what are any proven and effective exit strategies when buying on a L/O?

I guess one one would be to move-in and live on the property for the term of the lease and then having to come up with the cash to exercise the option, not a very good strategy.

Any others?

Thx/Rafael

[Anonymous]

Anonymous

I agree completely!

I would never do a sandwich lease option.

If I’m making payments every month, I want the deed! That’s the only way I’d feel comfortable offering a lease with an option t someone else.

There are just too many things that can go wrong with a lease option on the buy side that you have no control over… even if you do put it in a land trust

the seller/optionor could file bankruptcy, or get a divorce and the judge demands the property be sold, one of the sellers could die or get in to a lot of legal problems or IRS problems.

Get the deed by buying with seller financing and you’ll know that you can deliver to your lease option buyers.

Jackie