Hello , Just wanting to know more about lease options and how sandwich leasing works… Am very interested in exploring this area of investing as I am in S.A. and we can't do WRAPS / Vendor financing here… Any answers would help… Thanks Kancab..
Wrap around mortgages are not legal in SA, all though these are a form of vendor financing other vendor financing techniques are OK. We have done lot's of leasing with option to purchase type deals both for ourselves and our clients, also vendor finacing in terms of selling a property and leaving a deposit in as a second mortgage does not cross any boundries with legislation.
A sandwitch is when you buy an option to purchase and take out a lease then sell it to someone else for a profit.
Thanks for your reply Xenia. Where can i find out about the other forms of vendor financing ?? So to create a sandwich lease i would approach someone with a house for sale and purchase it off of them as a lease option then find another buyer who would be willing to purchase the same house from me as a lease option …The profit comes from the increased lease payments received from the purchaser and a higher buy-out price .. Is this correct ??
Hi Kancab,
It is essetially vewry simple; you rent a property (let say for $150per week) form person A (the owner) with the option to buy it for an agreed price (say $200,000) and then you sublet the same property (for $200p.w) to person B (the purchaser) with an option to buy it at an agreed price (say $250,000).
Hope that helps
If you would like some more help please feeel free to shoot me a email and we can take if from there…
Happy Days,
Beck
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