Within the field of real estate investment there are many areas to invest. One of the best kept secrets in the real estate investment community and also one of the best and safest areas that investors are looking for is model home leaseback. Let’s see why model home leasebacks are a great investment.
Because of how a lease back model is structured, it is one of the safest investments in the real estate world. Is that how it works. The builder builds the home, sells it to the investor, and then leases it back for a minimum of two years (with periodic 1-year options to renew the lease). The builder covers utilities, HOA (home owners association fee), insurance, maintenance, and taxes during the leaseback period. It is not only a safe investment, but also one with a guaranteed positive cash flow during the lease period. The builder will use the home as a model to sell new homes to home buyers in the community. Investors know that this type of investment is a rarity and is often considered the best answer to long-distance investing, since it is virtually hands-off.
Model homes are the first homes built in the neighborhood. Builders always build in price increases as the neighborhood sells and model homes generally have the best upgrades and amenities, as the builder wants to show potential buyers the options and upgrades they can choose to add to the new home they are looking for. will buy. Model homes are decorated and assist the builder in the sales process. As the community builds and homes appreciate, you are locked into the original lower price from the time the community begins.
In recent years, many West Coast investors, along with people relocating from the Northeast, have been looking to the Carolinas due to positive job growth and steady appreciation. Because of our relationship with builders, our history of selling to investors buying in the Charlotte market, and the advantage of having the “inside track with builders,” we may have the first opportunity on the model lease. Homes offered by local builders and developers in the Carolina market.
An experienced investor is always looking for the exit strategy for any investment, even before buying it. Leaseback model homes have a great advantage in that they can be very easily shown to potential buyers and tenants during the leaseback period and can be rented or sold before the end of the lease. Therefore, the investor can maintain his cash flow stream without interruption. Model homes are open during the day for easy viewing. Some builders may even offer a guaranteed sale after the end of the lease or they will buy the home back. Savvy investors can sometimes negotiate to have the furniture included in the deal so that it remains in the home after the lease period ends.
This type of investment is also very attractive to the soon-to-retire baby boomer generation who may be moving out in a couple of years and can coordinate the end of the lease with repossession of the home. The same can be said for the second home or vacation home buyer who wants to keep the home as a vacation home for vacation and seasonal use. Fully furnished homes can be rented out when not in use to maintain a steady cash flow throughout the year.
As everyone knows, Charlotte, NC, is one of the few remaining hot and viable markets in the United States for growth, cash flow, and appreciation in real estate. It has a great mix of job growth and is number one in the nation for people moving to the area according to United Van Lines.
