Leasebacks are generally used within commercial real estate; however, it is becoming more and more popular to see them within every day real estate transactions including residential real estate. In short, a leaseback is when you as the homeowner sell your property and then rent the property via leaseback from the buyer/new homeowner. This allows you to stay within your home even after the sale, but instead of being the homeowner you are now the renter.
Generally, there are three different reasons you may choose to try and sell your home through a leaseback; however, each is unique to the seller and buyers’ situations.
#1 Time to Retire
Retirees are starting to take advantage of the option for many different reasons. The main perk to sell through a leaseback when it is time to retire is simply that you can use your equity from the sale to help feed your retirement fund while still living in your home and avoiding the stress of moving.
#2 Financial Hardship
Whether it be from a layoff, or a home loan that has gone underwater, by using a leaseback you are able to get out of your mortgage, thus eliminating the revolving debt while still remaining within your home. If your loan is currently under water, you may not be seeing any proceeds from the sale, however pending on the new buyer’s rental terms, your monthly payment may lessen helping your situation drastically.
Related: Why my Home Won’t Sell
If you have a lot of equity within your home and are wanting to use that equity for other financial gains, whether paying off your credit cards or vehicles, saving for your children’s college, etc. then this could be a great option. You can remain in your home while still seeing the equity from the sale to use to your liking.
There are many different reasons as to why you may choose to sell your home through a leaseback transaction, however, when considering the option, it is important to look at all of the pros and cons to ensure that you understand how the process works prior to deciding if it is the best decision for you personally. As with all things, there are pros and cons to everything and due to this you should make sure to look at both the positives and negatives should you be interested in perusing a leaseback sale.
If you’re currently searching for a new home, whether for an investment property or a primary residence, are ready to sell your home and are in need of a qualified seller’s agent, or if you have any questions regarding Miami Real Estate, please feel free to contact our office at any time.