A sale lease back occurs when a property owner sells property to an investor while agreeing to lease back the property for a mutually acceptable rental rate and term.
- To stay in current location and avoid cost of relocating.
- Free up cash to put into business, business acquisitions, working capital or into seller’s pocket.
- Offer seller financing earning cashflow and interest while reducing upfront capital gains.
- Control cashflows by structuring rental payments that meet company goals.
- Remove a debt from the company’s balance sheet which may provide opportunities to borrow. for business opportunities.
- Depending on type of lease, reduce some of the financial responsibilities for building maintenance.
- Guaranteed income and cashflow from day one of ownership.
- Ownership of a possible appreciating asset.
- Negotiating favorable terms in case of default.
- If financing through a bank, the bank may provide better rates and terms with a qualified tenant in place.
- Predicable rate of returns.
- Depending on type of lease, buyer may have tenant fully responsible for all maintenance, taxes and insurance.