Buying a home has always symbolized the attainment of the American dream. It is a great investment and one that usually provides greater benefits than it does disadvantages. Homeownership symbolizes security and financial stability. While maintaining a home through timely repairs and regular upkeep isn’t always easy to fit into a busy schedule, there’s pride that comes with fulfilling those responsibilities as well.

The American Dream, in this form, also provides resources that can help us achieve remarkable accomplishments beyond the satisfaction of ownership.

Many homeowners have a large amount of equity, however, they’re unable to access the cash because of bad credit or low credit scores. Qualifying for a home equity loan or home equity line of credit (HELOC) is simply out of the question, but a home equity loan alternative can be the answer that’s needed. Selling a home and renting it back is an option that provides the pathway towards other accomplishments that homeowners want to achieve while already having reached the American dream. It is the quintessential definition of a “win/win situation.”

sell your house and rent back option

What is a sell house and rent back option?

When a home is put on the market and eventually sold, there’s an ending after the closing with the title company. The seller walks away, and that’s the end of it. However, with a sell house and rent back option, the seller remains in the home and rents it back from a company. Payment is negotiated based on the home’s value, and a contract is agreed upon by both parties. Sounds simple, right? It is more common nowadays than one might think. On a smaller scale, many homeowners are already familiar with the process and may have used it to buy the home they’re living in now.

Example: A buyer finds the home that they want to purchase, but the seller needs more time to move out or the buyer needs more time to move in. After the closing is completed, the seller receives the proceeds from the sale, which is used to purchase their new home or pay off the existing lender. The seller then remains in the home and leases it from the new owner for a specified period. Typically, the period is two to six months.

On a much larger scale, a leaseback from a real estate investment company allows the seller to use the available equity while remaining in the home. Typically, up to two years. In this case, however, the seller retains certain ownership rights and can sell the property for a mutually agreed-upon sales price or more, which is generally based on a percentage of the appraised value of the home. The seller also has sole rights to any proceeds above the agreed-upon sales price. And at the end of the contract, the seller is free to walk away. See the win/win? But it gets even better. The seller does not need to have a good credit rating or qualify for a loan to receive the cash from us. Credit does not even play a role in the transaction for a sell house and rent back option.

Are there any cons to a leaseback program?

The easy answer is no – not really. That’s because both parties are getting what they want out of the transaction. However, there are risks involved, and some might say drawbacks. For starters, if the seller is unable to buy the home back by the agreed-upon date, then they are no longer the legal owner. Of course, the seller is not obligated to use a traditional realtor and can choose to find a buyer who wants to be a landlord, which would allow more time to buy back the home. The rental market is strong and one of the most sought-after investment opportunities by entrepreneurs and those who want to earn passive income and, therefore, there is always the potential for finding the landlord type of buyer.

Another “con” is the uncertainty that comes with this type of transaction, especially if it is a second or third-generation home. But, as they always say, no risk – no reward. While a homeowner should always consider their level of comfort with a leaseback, it’s a business transaction none-the-less and an exceptional investment opportunity for those who have a forward-thinking mindset.

A leaseback can be used for many goals, such as:

  • Reducing Credit Card Debt
  • Investing in Business Ventures
  • College Tuition
  • Retirement Income
  • Eliminating Delinquent Property Tax

How do Homeowners Responsibly Sell a Home and Rent Back?

At the height of the 2008 financial crisis, the foreclosure rate was extremely high. Many homeowners were unable to refinance their homes and did not see any other option but to allow the bank to foreclose. Imagine if many of those same homeowners had used a home equity loan alternative and had more time to restructure their debts while remaining in the home.

Since 2004, Skydan Equity Partners has helped homeowners get the money they need by using the equity in their home. We’re committed to working side-by-side with homeowners throughout the process so that they fully understand the risks and the benefits, and there are many benefits to our program. Skydan Equity Partners does not require a credit check or FICO score to qualify for our leaseback program.

Before entering our leaseback program, we ask a few basic questions to learn about the home and the intended goal of the homeowners’ needs so that we’re confident that we can be of assistance. Once we have an assessment of the available equity, and a lease agreement is in place, we can typically have the cash in a homeowner’s hands within 30 days or less. We do not charge any interest, and payments can be deferred for up to two years with a sell house and rent back option.

Our sell house and rent back option is used by many homeowners who are unable to obtain a HELOC by traditional bank standards. We’re not held to those rules and regulations because we’re not a bank. Our mission is simple: “To help those who can’t help themselves.” We believe that everyone deserves an opportunity to use their available equity, and credit should not be a factor.

As a real estate investment company, it is our business to know the housing market, and we have the experience to back up our knowledge in the industry. Our team has decades of combined experience in helping homeowners with home equity loan poor credit issues. It is our pleasure to help the community achieve their financial goals by providing a home equity loan alternative.