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 all of your equity into cash flow.
So, what is a sale leaseback? Selling and leasing back the use of an asset has long been a business practice for commercial real estate and equipment, but using this sale leaseback arrangement to unlock equity for residential property is a relatively recent evolution.
Let’s explore whether a residential leaseback agreement is a good fit for your needs, and what the process entails.
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’re 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.
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:
Financially, an SLB transaction will allow them to:
Qualifying for a sale leaseback transaction is simpler than other home equity solutions because it’s not a loan. Rather than a lender, you’re working with a sale leaseback provider.
While mortgage lenders operate under a combination of government restrictions and in-house calculations to come up with fairly standardized credit score, income, and debt requirements, SLB providers are acting as home buyers and landlords, which allows for more variance in qualifications.
For instance, Truehold typically works with homeowners who have:
Some other providers require:
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:
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:
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:
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 a free, no-obligation offer. Truehold is built on putting people first, and our expert advisors are happy to talk you through multiple options to unlock your home equity and plan for your future.
1. Consumer Affairs. Buyers market vs. Sellers market. https://www.consumeraffairs.com/finance/buyers-market-vs-sellers-market.html
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