Builder Leasebacks for Model Homes Sacramento CA

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What would you say to a brand-new home with a long-term tenant in place, guaranteed rent, no maintenance and discounted upgrades as an added bonus?

Interested investors are eagerly saying, “Yes, please.”

Model homes allow real estate investors to buy at low cost, immediately lease the property and potentially sell high. By utilizing builder leasebacks, investors can cover much of the cost associated with the home, receive free maintenance and keep the investment property pristine during the life of the lease.

Through a builder leaseback agreement, investors purchase one of the builder’s model homes and lease it back to the company so it can continue to serve as a marketing tool for the sale of future homes in the development.

Builders offer leasebacks primarily to generate funding for new projects and the development of more homes. Smaller building companies typically use this tactic more frequently than larger companies. Smaller companies present riskier investments because they are more likely to run out of money and fail to finish developments, thus hindering the lease or the future profits from the model home. Unloading a model home means they can free up their credit for new ventures.

Since model homes are typically built in the early stages of a housing development, they can often be purchased at a lower price than subsequent phases. While model homes do see a bit of wear and tear, builders have a vested interest in keeping model homes in excellent condition and will cover most or all of the maintenance fees. Once the builder sells all the homes in a development, investors can sell their model homes at market value and cash out, or just keep them as rentals.