Sale-Leaseback: What's in it For the Buyer?
At first glance, some people believe that a sale-leaseback agreement benefits the person selling more than anything. After all, this is a quick way to generate cash, find alternative financing, and improve financial books overall. However, there are just as many reasons for a buyer to enter an agreement as well.
Those looking to capitalize on becoming a buyer can quickly gain capital for the financial agreement. Why would a person want to make a purchase? Here are a few of the main reasons why.
A better return rate with an investment
Perhaps the biggest reason why a buyer agrees to a sale leaseback transaction is to take advantage of a higher rate of return. When entering in this type of loan agreement, a person can avoid any laws that could limit interest rates.
Any increase in the value of the property during the lease goes directly to the buyer. There is also steady payment coming in every month that allows the buyer to depend on it.
Very easy to set up and understand
Some real estate investments are pretty complicated, especially for first-time buyers. With a sale-leaseback agreement, everything is pretty easy and straightforward for both the buyer and the seller.
If the seller makes any mistakes throughout the lease, it's easy to terminate the arrangement and evict the seller. This tends not to happen too much, as both parties have their finances examined thoroughly.
Since the transaction is beneficial for both the buyer and the seller, the entire process goes pretty quickly because that's what everyone wants. The faster the transaction goes, the quicker the seller gets access to cash. For a buyer, this means they get current market value and a favorable lease rate every month. The numbers are easy to crunch, and it's easy to gather just how much money is coming in each month.
Opportunity to customize
Buyers have quite a bit of control when it comes to lease customization. Maybe there is a unique situation for the seller, and the buyer is willing to work to make it come together. This gives the buyer leverage, which means they can set themselves up for high returns if necessary.
A buyer is in complete control to customize the lease of a purchase leaseback as they want. Standard lease documents don't allow for this flexibility.