Sandwich Lease Option ROI Calculator
Sandwich lease option = you lease-option a property from owner, then sub-lease-option to a tenant-buyer at higher rent and higher purchase price. Three profit centers: monthly cash flow, option fee spread, back-end equity.
| Upfront — option fee collected − paid | — |
| Monthly rent spread | — |
| Total rent spread over term | — |
| Back-end — sub-price − master-price | — |
| Total profit (all 3 streams) | — |
| Annualized ROI on option fee paid | — |
Sandwich lease option (SLO) is a creative real estate strategy: you lease-option from owner at $X rent and $Y option price, then sub-lease-option to a tenant-buyer at higher rent and higher option price. Three profit streams: upfront option fee spread ($5K-$20K typical), monthly rent spread ($200-$500), and back-end purchase price markup ($20K-$50K). All without taking title or qualifying for a loan.
The Three Profit Centers
(1) Upfront option fee spread: collect $10-$25K from tenant-buyer (non-refundable), pay $1-$5K to owner. Immediate cash. (2) Monthly rent spread: $200-$500/mo spread between what you pay owner and what tenant-buyer pays you. (3) Back-end markup: you control property at $280K option price from owner, sell option to tenant-buyer at $320K. If tenant-buyer exercises, you collect $40K spread.
Execution Risk Is Real
(1) Tenant-buyer fails to qualify: 60-70% of lease-option tenant-buyers never exercise. You keep their option fee — but you also need to find a new tenant-buyer or buy the property yourself when your master option expires. (2) Owner refuses to convey: must have airtight recorded option agreement. (3) Tenant damages: you're on the hook to owner. (4) State law restrictions: TX, NC, OK treat lease options to consumers as equitable mortgages — must comply with consumer protection statutes. Always use a real estate attorney.
Last updated May 2026. Sources: BiggerPockets Lease Options.