The Sale Leaseback Process: A Guide
Lucas Grohn
Senior Manager of Sales at Truehold - A Thought-Leader in Real Estate
Are you considering a sale leaseback arrangement but aren’t sure how to begin? The sale leaseback process is a unique way to stay in your home while turning your equity into cash.
So, what is a sale leaseback? Let’s explore whether a residential leaseback agreement is a good fit for your needs, and what the process entails.
Who’s Eligible to Enter a Sale Leaseback Agreement?
If you own a home and have a combination of equity and future income or current assets that will allow you to commit to monthly rental payments, you might be eligible for a sale leaseback (SLB).
There are several sale and leaseback advantages and disadvantages to consider. But more homeowners are choosing this option for advantages like flexibility, freedom from debt, and ability to translate their equity into cash flow to help with financial needs, retirement planning, or business ventures.
When a Sale Leaseback May Benefit a Homeowner
Consider Jane and Bob, both in their early fifties. They bought a house in 1998 and are six years away from the end of a 30-year mortgage term. During that time, they raised two children, fenced in the backyard for a couple of hounds, and made close friends among their neighbors.
With both kids now living in other states, Jane’s turned one bedroom into a craft space for wintertime quilting, and Bob uses another for freelance consulting work, making it a tax-deductible home office.
Their home works for their needs, but they’d love to have someone to call for leaky faucets and to handle replacing the aging roof—Bob and Jane would rather spend time and money visiting their children and traveling for fun than dealing with house repairs and upkeep.
After considering multiple options, Jane and Bob decide on a sale leaseback agreement. It’s the right fit for them because they:
- Want to continue living in their current home
- Want to avoid the work, time, and stress of maintenance and repairs
- Don’t have heirs who want to keep the property in the family
- Are under the age 62 limit for a reverse mortgage
Financially, an SLB transaction will allow them to:
- Pay off their mortgage and avoid taking on more debt
- Turn all of their home equity into cash for travel and retirement investments
- Stop paying for repairs, maintenance, and property insurance and tax
- Budget for a stable monthly lease payment and utilities
The Sale and Leaseback Process
Like any major real estate transaction, an SLB should start with some research on your part because it is important that you understand how to evaluate a sale leaseback. So before you opt for sale leaseback financing, be sure you understand:
- Different loan and sale options available to access equity to choose what’s best for you
- Today’s real estate market (as of mid-2022, it’s still a seller’s market)1
- How your home equity is determined through property value and mortgage principal
- Trends of sale and rental payments on homes in your neighborhood
- Your credit score and whether your credit report contains errors you can address
- Tax implications of an SLB versus other sale or loan options
- Any lease agreement before you sign
With Truehold, you can convert your home to a sale leaseback transaction in as little as 30 days, or at your own pace. Steps include:
- Request an offer online or by calling 314-353-9757
- Talk with a Truehold representative about your home and our solutions
- Receive an offer including home price and rent cost and details to review
- Work with us to schedule an inspection and appraisal
- Consider the final offer, which will be presented based on both house and rent market value
- Receive the cash amount of your home equity in less than 30 days
- Stop paying mortgage, property tax, property insurance, and essential repairs
- Begin paying monthly rent
Understanding the Terms of the SLB Agreement
Even though you can continue living in your home with no move and no new loans or debts, sale leaseback financing is a major change. We recommend that you:
- Engage a professional such as a real estate lawyer, agency, or mortgage broker
- Include any family members and friends you’d like in discussions with us
- Review the details of both the sale and rental documents and ask questions
We’re Here for You
If you’re ready to learn more about Truehold's Sale-Leaseback option, connect with us today for an info kit and get the ball rolling on an offer. Truehold is built on putting people first, and our repesentatives are happy to talk you through multiple options to unlock your home equity and plan for your future.
You can call us at 314-353-9757, email hello@truehold.com, or visit our website.
Sources:
1. Consumer Affairs. Buyers market vs. Sellers market. https://www.consumeraffairs.com/finance/buyers-market-vs-sellers-market.html
Lucas Grohn
Senior Manager of Sales at Truehold - A Thought-Leader in Real Estate
Lucas Grohn is a Senior Manager of Sales at Truehold, leading a team of local market experts and overseeing the brand’s sales outreach strategy. Lucas has been a thought-leader in the real estate industry for more than a decade. He got his start working alongside institutional investors and has since found himself in a myriad of different roles.From being a Managing Broker, to training new agents at some of the country's most well known real estate brands (Redfin, Zillow, RE/MAX). He spends his free time hanging with his family on the beach in Georgia and taking pictures of two daughters (1&4).
