• What Is A Sandwich Option? | Reena Malra [Audio]

    ‘What is a sandwich option?’ is another question I am increasingly getting asked, partly because it’s such an ambiguous phrase.

    In short, a sandwich option is where you have done a deal with a seller (this could be an instalment contract or a property lease option) and have decided that rather than being the end buyer yourself, you will pass it over to someone else. This could be a first time buyer, or perhaps someone who is unable to get onto the property ladder or get their next property through traditional means.

    So basically you are sitting in the middle, (hence the term ‘sandwich’) and are managing the relationship between the seller and the buyer.

    So how do you make money? Well every deal is different but typically the tenant buyer would give us a small deposit rather than 25% or 30% required by traditional lenders – this would be anything between three and seven per cent making it much more affordable. So that’s the upfront money required.

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    Following this, we ask the tenant buyer to pay in two ways. They pay a surplus (sometimes referred to as super rent). So the cash is difference between what you’ve agreed with the seller for babysitting the property liability and what you are getting from the buyer. The difference between the two provides you with the cash flow that you receive on a monthly basis.

    So a sandwich option strategy is similar to a property lease option where you could be paying for example, £300 a month but charging £600 to the tenant, with the difference being profit in your pocket.

    Obviously, there is more detail to it. In simple terms you are making money up front, making money in the middle and making money at the back end when you sell the property for more than you agree with the seller. Then of course, the term will vary depending on what you agree with the buyer.

    Using these two strategies within one strategy, and essentially being the ‘meat in the sandwich’ to facilitate the buyer and seller enables you to make money at every stage, and that’s the beauty of it.

    If you are interested in finding out more about sandwich options and how you can benefit from using them, get in touch with me at reena@reenamalra.com,  call me on 0203 397 7030 or arrange a callback

     

     

     

    About Reena Malra

    Connect with me: Google+ Reena Malra is one of the UKs most successful property investors and mentors. The strategies Reena has discovered and developed over the past few years take the focus off the price and put it on the flexible and convenient payment terms. This is how Reena can structure transactions to really benefit both the buyer and the seller. Reena specialises in property lease options, instalment contracts, rent torent, below market value (BMV), stopping repossessions, joint venture, delayed completion and tenant buyer strategies. She also runsworkshops and webinars, and offers property consultancy services and one-to-one mentoring.

    View all posts by Reena Malra

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