Frequently Asked Questions & Answers
By: Ron Black -
Professional Real Estate Investor
Licensed Texas Real Estate Broker
President, Texas Investor Homes
Houston - Dallas - Fort Worth - Austin - San Antonio
Investor Hotline #972-897-6190
Ok, so you know your local real estate market is on the skids but you know you need to look at new investment opportunities so what do you do? All the Gurus are saying you should invest "nationally" but you just have not found the right vehicle that gives you the warm fuzzies. You have heard that long distance real estate investing can be a nightmare. I mean, let's face it, even managing your rental properties locally can be a pain much less 2,000 miles away. There is a solution to easing into a market in another state without the traditional start-up bumps and bruises or expenses associated with traditional rental property, it's called "Model Home Leasebacks".
Overall, the model home leaseback program should likely be part of any good real estate investment portfolio, especially if you plan on investing in another state. The key is that you have a measured risk with stable income for a time period, more than almost any other real estate investment. After the builder's lease is over, you have an exit strategy pre-planned for rental or resale. This type of investment can have very strong cash on cash returns. Add a little appreciation, low expenses and the tax benefits and your total return could be staggering.
Is it any wonder why many long-distance investors lick their lips when they hear the term "model home leaseback"? If you are looking for a simple way to invest long distance it will be hard to beat model home leasebacks. It's really a very simple and more secure way to invest in real estate, especially if you are risk averse. If you have ever taken a pencil to the fees and expenses you incur for a typical rental home over 2 years, then you know where most of you cash flow actually flows...right out of your pocket.
With model home leasebacks the cash flow you earn is the cash flow you actually keep. Some of the builders also pay taxes and home owner's association fees in addition to above average market rent. Those deals are rare but are out there if you dig deep enough, or better yet, know someone who has those connections.