In a sale-leaseback plan, an investor buys the home (at a price from 15 - 25 percent below the market value) and immediately leases it back to the former owner for life. The new owner assumes taxes, insurance, major repairs and other expenses usually associated with home ownership. Payment to the seller usually consists of a lump- sum down payment plus monthly payments. Rental is negotiable. A contract spells out in detail the rights and obligations of both parties. Sale-leaseback contracts also contain complicated clauses specifying, for example, what will happen in the event of the original owner’s death.
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