What is a model home sale leaseback?

A model home sale-leaseback is a real estate transaction in which a home builder sells one or more of its model homes to an investor, and then immediately leases the home back from the investor for a set period of time. The builder uses the model home as a showcase for potential buyers, and the investor earns rental income from the leaseback agreement.

This type of transaction can be beneficial for both parties. The builder can use the model home to market their properties to potential buyers while reducing holding risk. The investor, on the other hand, can earn rental income from a property.

The terms of a model home sale-leaseback can vary, but typically the builder will lease the property back for a period of several years. During this time, the builder will pay rent to the investor and continue to use the home as a model for potential buyers. At the end of the leaseback period, the builder will vacate the property, and the investor can either sell it or continue to rent it out as a traditional rental property.

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