Model Home Leaseback Opportunity near Washington DC...Good Deal?

7 Replies


I own one rental home in Maryland just outside DC. I lived in this home for 11 years. I have a current deal I'm considering that doesn't meet most minimum requirements for CAP rate, Cash on cash return, etc that I see on the forums. Here are the specifics:

- $369 Selling price (new construction), $15% down payment, $12k closing costs, $2700 Monthly rent back (the reputable home builder will rent from me until the community is finished in 4 years, maybe sooner.), no repair costs, no renovation costs, no prop mgmt fees, etc. 

I haven't signed the contract yet so some of these numbers are subject to change. Has anyone ever done a Modelhome leaseback? What numbers do you typically look at to determine if this is a "good deal"? 

I am a newbee so all thoughts/ ideas are welcome. 

I see those from time to time and have wondered how it would work out.

@Rhonda Harrison
Few questions:

1. Do they still provide any warranty ?
2. Will they repaint the home etc prior to giving it back to you
3. May I ask who is the builder (I am in the area and know most of the builders)

I would run numbers like a typical rental where you have X amount of $ into the deal and it will cash flow Y amount to see what your getting as a return. What is nice is you do not have to deal with tenants and vacancy etc.

1- Warranty will need to be discussed but if they take four yearsit may no longer be under warranty

2- Yes, patch paint and the overall condition of the house will be “new” at the end of the lease

3- The builder is DR Horton

If this is one of their Frederick properties, I would strongly consider that. If it is the Glenarden development, I would not.

My mistake the builder is Ryan Homes.

Thank you!

Originally posted by @Rhonda Harrison :

My mistake the builder is Ryan Homes.

Thank you!

 I wouldnt buy a Ryan. They are about the lowest tier builder in the area. Their houses do not age well.

Not even if I was planning to sell at the completion of the community ? 

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