Benefits Of Sale Lease Back Transactions In Real Estate


Real estate assets like land and buildings are non-essential investments that can weigh heavily on your finances. You have the option to sell the property as long as you have real estate insurance. However, they likely serve an important purpose in your business activities. This is where a sale lease back comes in handy. A sale lease back allows you to sell your real estate while concurrently executing a lease. Thus, you would still have access to the property, but not own it outright. If this interests you as a business owner, consider the advantages listed below. Here are the benefits of sale lease back transactions.

Better Tax Savings

Once you become a lessee, you can start writing your lease payments off as an expense for tax purposes. This is significant due to the average size of monthly payments. As a property owner, it is possible to get tax deductions from interest expenses and depreciation. However, these deductions pale in comparison to lease payment deductions. Greater tax savings are one of the main benefits of sale lease back transactions.

Greater Property Value

One of the main advantages of sale lease back transactions is that they can be structured to finance up to 100% of the property’s appraised value. This is superior to a mortgage, which only allows for up to 70 or 80%. Sale lease backs have better financing rates as well. They provide cash proceeds and only involve the property as collateral. Ultimately, they allow for better financing options due to the increased value placed on the property. This is a major benefit to sale lease back transactions.

Control Over Your Lease Terms

Your ownership of the real estate being sold gives you a significant amount of control when structuring your lease. You have authority over both ends of the transaction. You can use your position to leverage an acceptable lease with your buyer. Leases usually run from 10 to 15 years. When your initial contract is up, you can negotiate a favorable extension. You can also set terms for early termination, in case you find a need for greater flexibility. Control over your leasing terms is an important advantage of sale lease back transactions.

Maintain Control Over Your Property

Sale lease back transactions are typically structured as “triple-net leases.” This means that you are responsible for the taxes, insurance and maintenance of the property. Having these obligations gives you as much control over the property as you had as an owner. If you manage to negotiate a favorable, long-term lease, you can expect to have further opportunities in the future. You can give yourself the option to expand on the property. You might even consider subleasing the property. Maintaining control over your property is a primary benefit to sale lease back transactions.

Sale lease backs are an intelligent way to maintain control over a property while relieving yourself of the burdens of ownership. You can save on taxes through lease payment deductions. You can increase your total assets through improved property value, as well. All of this occurs while you maintain control over your property and leasing terms. Evaluate the benefits in this post and consider entering a sale lease back transaction for your property.

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