This involves acquiring a property below fair market value that requires some minor rehab and repairs. The Investor leases the home for a set period of time to a credit challenged Buyer and offers them an option to buy the home at a later in the near future. Usually, the Buyer will be required to place a large deposit upfront and pay monthly payments for a designated period of time. At the end of the "leasing period", the Buyer will pay a larger sum of money to purchase the home.
SANDWICH LEASE OPTION:
Involves acquiring the property below fair market value that requires some minor rehab or repairs. The Investor leases the property from the Seller with an option for the Investor to buy the property (after a short period of time). The Investor then subleases the property to a credit-challenged Renter. The Investor offers the credit-challenged Renter the option to buy the property at a later date (over a longer period of time). The Investor will exercise their option and buy the property before the credit-challenged Renter' rental period expires. After the rental period expires, the credit-challenged Renter will now be able to purchase the property out right after paying a large sum.
This is sort of like a "balloon payment" to complete the purchase. Normally, with this option the Renter pays a lower rate during their rental period which helps them to pay off their dept and establish their credit.
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