What is a "Sandwich L/O"? and what is the difference from a Regular L/O?

What are the pros and cons and what are you responsible.

Investing glossary. Top left.

let us know from there. Good luck.


Sandwich Lease - lease held by a lessee (tenant) who becomes a lessor (landlord) by subletting to another lessee (subtenant), typically the sandwich leaseholder is neither the owner nor the user of the property.

Again, from an Investor’s Stanpoint. What is the difference? Am I confusing something?

The difference:

In a L/O, the lessor/landlord IS the OWNER of the property.

In a sandwich L/O, the lessor/landlord IS the lessee/tenant in another L/O, one that has a sublet policy.

Example: An investor chooses to enter into an L/O with a seller (as opposed to buying outright) that has a permission to sublet clause, for, let’s say, $100K purchase in 3 years and $600/month. The investor then sublets, or enters into another L/O with the end tenant (this is the sandwich L/O) for, say, a 2 year lease with a $110K purchase and $800/month rent.

There really isn’t pros and cons between the two, as you must have the one to do the other (create a ‘sandwich’).

Performing sandwich l/o’s as an investor is a very risky (and possibly rewarding) method of investment. You do not have control over the property in any respect. You’re not the owner and you’re really not the tenant. You are simply a middle-man creating a spread and hoping that the owner pays their bills, doesn’t go bankrupt and that the end t/b pays their bills, doesn’t trash the place, and actually chooses to buy at the end of term.


Got you!

So what can you do in a case where the owner wants to do a L/O and cant find anyone. And you might have someone, but you don’t want to managehe property for the whole term. The owner is willing to manage it. Does it work out that you get the same profits throughout the year? and a back end profit?