First Deal

[Craig 0]

I understand with the CA you are acting as the go between the homeowner and the renter. With a flat fee for your services. But, the sandwich lease we also are between the two with the assignment of contract to the renter but the money goes through me then to the owner.

 

I am doing my first deal and need to clearify the CA vs Sandwich Lease. The homeowner wants to relocate ASAP to Hawaii. It sure beats NY cold winters.

[Gary (MO) 0]

Craig~

 

With a 'sandwich' lease you are getting a profit from

 

1) The difference between what you have to pay the owner/seller to get into the deal and the option money you collect from your T/B for them to get into the deal.

 

2) The difference between the monthly payment you are paying the seller and the difference you are collecting monthly from your T/B.

 

3) The 'back-end' difference; the profit you realize in the difference between the price of the property from seller to you versus you to T/B.

 

I guess you could say that some of it "flows through" but technically YOU are paying the SELLER which is a different deal than the T/B paying YOU. My local tire dealer pays Goodyear but I pay HIM.

 

You are not assigning your contract between you and the seller to your T/B - you are sub-leasing the seller's property to the T/B with a separate agreement between you and the T/B (obviously with different terms).

 

With a straight option (without the ability to sub-lease to own) you would simply assign your position in the contract with the seller - for a fee (which would represent your one and only payday for that particular deal).

 

Gary

[MichaelC 160]

Craig, you and I have discussed this already. But let me repeat it here again for others who may have the same question.

With a sandwich lease you are profiting from the spread between the terms between you and the homeowner, and you and your tenant/buyer. You are negotiating the lowest possible terms with the homeowner that you can while, conversely, negotiating the highest possible terms you can with the t/b. This is your spread and your profit. You remain in the middle of the deal. Hence, a sandwich lease.

With the CA, in effect what you are doing is finding that t/b that you would have found for yourself in you were doing a sandwich lease. The terms you would accept with your tenant/buyer are now going to be the terms the homeowner receives from the t/b you find for them.

So, the homeowner receives better terms and more money in exchange for having a more hands on responsibility in the deal. You receive the option money, or some part of it, in exchange for your know how. Once the deal is signed off, you are out of the loop entirely and on to other things.

[Craig 0]

Craig, you and I have discussed this already.  But let me repeat it here again for

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I got it. Just a little brain dead. I guess. Thanks for the little 101 class for the kid in the back seat. <grin>