Investing in real estate is tough. Unlike stocks, bonds or mutual funds you cannot login to your brokerage account and review some reports before making a trade. Real estate investing bears more resemblance to a marathon wherein you have to look at ten\u2019s to hundreds of properties before you can make an investment.<\/p>\n
Real Estate investing can seem overwhelming without the right investment strategy given the sheer amount of time and effort it takes to accomplish that marathon. \u00a0Without an investment strategy, a real estate investor can feel overwhelmed in choosing between key questions as: where to invest, who to market to, and how to make a profit.<\/p>\n
Investors, bloggers and authors speak about having an investment strategy. What is it exactly? According to Investopedia.com<\/a>, an investment strategy is an investor’s plan of attack to guide their investment decisions\u00a0based on individual goals, risk tolerance and future needs for capital. \u00a0Simplifying that further, an investment strategy requires you to think about what your personal risk-reward ratio is and how that functions within your overall real estate portfolio goals.<\/p>\n I typically break real estate investing strategies into the following buckets:<\/p>\n Related: Top 100 Ways to Make Money in Real Estate<\/a><\/p>\n Over the course of the next few articles, I will be addressing investment strategies that I have personally utilized over the course of my real estate investment tenure. This article we start off with a Yield Investment Strategy of Sale-Lease Back.<\/p>\n A sale-leaseback\u00a0is a\u00a0financial transaction in which the owner of a property sells an\u00a0asset,\u00a0and then\u00a0leases\u00a0it back from the\u00a0buyer. A sale-and-leaseback is typically seen in a commercial\u00a0real estate\u00a0transaction, in which one party sells it’s\u00a0corporate real estate\u00a0assets to another party, and then leases the property back at a\u00a0rental\u00a0rate and a lease term that is acceptable to the new buyer.<\/p>\n The answer to this key question helps you figure out whom to approach so that you can narrow your prospect list better. Based on my research and experience, there are two major motivations that drive a seller to accept a sale-lease back offer:<\/p>\n I.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Sellers needs cash from illiquid assets<\/p>\n II.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Seller still needs to utilize the asset<\/p>\n These pain points typically exist more for commercial rather than residential owners so keep that in mind as you develop your target-marketing list. I have seen it done in residential transactions where the seller still loves the house and wants to stay there while still needing a lump sum of cash or a monthly cash flow.<\/p>\n Below are the key benefits that a seller can achieve by accepting a sale-lease back offer:<\/p>\n Given these typical benefits you want to work with a seller who is financially savvy or works with an advisor who understands these benefits when presenting this offer.<\/p>\n The key benefits to the buyer are as follows:<\/p>\n These key benefits help make this a great investment strategy for passive oriented cash flow investment buyers.<\/p>\n\n
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\u00a0What is a Sale- Leaseback Strategy?<\/h2>\n
Why would a seller want to enter into a sale-lease back?<\/h3>\n
What are the benefits to both parties?<\/h3>\n
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