What is a Home Sale with a Long-Term Leaseback?

Selling a home with a long-term leaseback is the same as selling a home the traditional way except the seller remains living in the home as a tenant after the sale closes. This has many advantages for the home seller and is becoming a popular way to sell a home. In this article, we will discuss the advantages of selling a home with a long-term leaseback and why you may want to sell your home with a leaseback.

What are the Advantages of a Home Sale with a Long-Term Leaseback?

Ease of Sale

Typically, when you sell a home with a leaseback the home is bought by an investor who offers a “Selling a Home with a Long-Term Leaseback” program which can also be called a rent-back or Sell and Stay Program. For many sellers, having an investor purchase the home is easier because there are no public showings, they save the 6% commission, the home is sold as-is, and the seller can shop for the best offer from the comfort of their home. In addition, since the investor usually pays cash the closing is quicker and you avoid the risks and hassles of selling to an individual.

Unlock 100% of Your Equity

When you do a cash-out refinance or a home equity loan you are typically limited in the amount you can borrow, which is usually 80% of the home value. When selling a home with a long-term leaseback you get 100% of the cash equity you have in the home. So if you have a home that is valued at $400,000, by selling the home with a leaseback you will get an additional $80,000 in equity but remain living in the home. For many families that is a substantial benefit.

Remain Living in the Home

One of the key benefits of selling a home with a long-term leaseback is the ability to stay living in the home. For many families, moving is a stressful process and a leaseback allows them to ease into the transition at their own pace. For some, they are comfortable in their home but want the flexibility that renting offers. This allows them to move out when it is right for them. For others, they like the idea of someone else maintaining the home and being responsible for repairs and maintenance. When the roof leaks it is not their problem. Whatever your reason, it sure is nice to remain living in the home until you are ready to make a move.

Fixed Monthly Expenses

When you are the homeowner it is your wallet that takes the hit when there is an increase in taxes, insurance, HOA fees, and unexpected repairs. Selling a home with a long-term leaseback eliminates that risk and you only have one monthly payment. It is not your bank account that gets drained when the insurance company increases the premium by $500 a year or the HOA charges a $1,000 special assessment.

Sell Home As-Is

Investors will typically buy a home in almost any condition. And since they are paying cash, a bank will not inspect the home. The investor simply adjusts the purchase price taking into consideration the cost of the repairs. So one major advantage of selling a home with a long-term leaseback is that the home can be sold as-is. Have a leaky roof or need a heating system, no problem. What would typically prevent a home from being sold to a traditional buyer is not a problem when you take advantage of selling a home with a long-term leaseback.

Flexible Lease Term

Another advantage of selling a home with a long-term leaseback is the flexible lease term. Home sellers who know they will be relocating sometime in the next 6 to 12 months can tailor the lease term to meet their needs.

A flexible lease term is especially useful to the home seller who needs the cash and certainty of the sale of their current home to build their new home. They get the cash they need but remain living in the home for a few additional months while their new home is being built.

It can also be a great benefit to the retiree who wants to enjoy their golden years. They will have all of the cash to enjoy life without the responsibility of maintaining the home and can move when they decide the time is right.

No Income or Credit Check

Typically when leasing a home or apartment you are required to pay an application fee and pass the landlord’s income and credit check requirements. When you sell a home to an investor with a long-term leaseback there isn’t a credit check or income qualifications. This is a huge benefit for families facing a temporary financial challenge. They get the cash needed to overcome their challenges, gain the time needed to repair their credit and stay living in their home. Few if any programs provide the benefits and advantages of selling a home with a long-term leaseback!

Is the Home Sale with Long-term Rent Back Right for You?

Although there are many advantages of selling a home with a long-term leaseback everyone’s home and situation is different so the program might not be available or a good fit for you. We recommend you carefully consider your options and make the decision that is best for your situation and family.

How to Find a Company that Will Buy Your Home and Give You a Long-Term Leaseback

Although a home sale with a long-term leaseback program is growing in popularity, there are still only a handful of investors that offer a sale with a long-term leaseback program and the ones that offer the program have specific requirements. Not all homes or sellers will qualify for the program. So you will need to do some research to find a company that offers a sale with a leaseback program in your area. We suggest you do an internet search with the terms “Sell Your Home with a Long-Term Leaseback” or “Home Sale with Long-Term Rent-Back” and you should find a reputable company that offers the program in your area.

Conclusion

As detailed above, there are many advantages to selling a home with a long-term leaseback but the biggest benefit is the ability of the homeowner to get access to 100% of their home’s cash equity without sacrificing where they live. We hope you found this article informative and we encourage you to explore your options to find the solution that is best for you and your family!