Sublease optioning?

Hey everyone,
I typically purchase homes using Subject-2 and Owner financing but i have come across a different idea that seems quite nice to me. I was working a deal where i made an offer for purchasing Subject-To and then the seller came back to tell me that they decided to go with another investor instead who could offer them something better. She explained to me what this other investor had offered. Where the seller does a lease option agreement with the investor and the deed stays in her name. The investor pays her 1000/month and he lease options it out for 1300/month. The investor said that once he finds a new tenant, then he will begin to pay her the 1000/month. The investor is giving his new lease option tenants 24 months to purchase the home. He makes his 300/month cash flow with no upfront holding costs!! They agreed upon a end purchase price and then the investor receives anything up and above that price. This is a strategy that would work with a lot of the prospects i see that do not have a lot of equity, yet have a good existing loan, where some cash flow can be made. Do any of you use this strategy? I want to know how to do this legally and who’s paperwork would be the best to use? Do any of you see any pitfalls to using this strategy?

Thanks,
Jonathan

You’re talking Sandwich Lease Options. The other investor struck a good deal with an unknowledgable seller. Usually he is responcible for payments if he has a subleaser(T/B) or not. He is not responcible in this deal, thats what makes it so good for him. If the deal hasn’t been made yet then go back to the seller and offer to pay if you don’t have a T/B lined up. Just be sure you can find a T/B. Herbster

yea, or aka Purchase option lease. you can find a free book on this website called mutiple streams of income. and like you mentioned thats exactly how it works.