- Dennis Norman
I was at a real estate industry function last night and, while talking with Dave, a commercial real estate broker, an interesting topic came up. We were discussing the residential market and potential buying opportunities, concerns about an oversupply of rental property, etc. Dave then asked if I thought sale-leasebacks would be a good approach? Sale-leasebacks are very common in the commercial real estate world but not in the residential world.
I realize, this is not a new concept, just an uncommon one. My conversation with Dave got me thinking though and I realized over the years I have in fact done some sale-leasebacks…I guess from my perspective they were actually buy-leasebacks, but you get the idea. In the instances I can recall doing a buy-leaseback, the sellers had equity they wanted to get out of their home and had the ability to pay market rent. I don’t know how common this scenario would be today and most likely the majority of the people fitting into that mold would be seniors and quite frankly I can’t figure out for the life of me why a senior would want to do a sale-leaseback over an FHA reverse mortgage.
I then got thinking about all those homeowners out there that are underwater on their mortgages and trying to do short-sales. Some want out of their homes and to move on, or simply can’t afford anything close to market rent, but I would think there are a fair amount of sellers that could afford rent. Perhaps their mortgage payments are high, due to rates or having multiple mortgages, or just simply because of the size of the mortgage.
It seems if a seller is in a position to pay something close to market rent, and an investor can, by means of a short sale, buy the property at a low enough price whereby the rent will provide a little cash flow, it could be a win-win situation. The seller gets to stay in their home, the investor has a tenant that hopefully can help the investor ride out the bad market and then at some point in the future hopefully there has been some appreciation, the investor cashes in a moves on.
I’m not if the “short-sale” lender would have an issue with this type of transaction…clearly they won’t allow the seller to receive any proceeds, but I’m not so sure they care that the buyer will lease the house back to the former owner. If anyone has any experience doing these transactions, please shoot me a comment..
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Do you know anyone doing sale leasebacks for owner occupied residential in new york state
Hi John
Unfortunately I do not know anyone in New York doing that…however, perhaps a reader will know someone and respond..Dennis
Since we’re discussing the Are home sale-leasebacks opportunities for real estate investors? | Real Estate Investors Daily subject, Although grading and other work can create more level terrain, this is costly and time-intensive. If you want to build on the land you’re purchasing, consider access and building logistics before selecting a plot of land.
Do you know anyone doing residential sale-leaseback in Nevada. I have found this question has been brought to my attention more than once.
Thank You,
TT