Leasebacking… Good idea, Rich!
My buddy Rich at the WallStreetJournal.com gave me a great idea. LeaseBacks!
In order to keep a particular property from going into foreclosure, or to raise some much needed funds for future investment, a leaseback may be an alternative for you. A Leaseback arrangement, is an arrangement that after purchasing an asset, the owner enters a long-term agreement by which the property is leased back to the seller, at an agreed-to rate.
In addition to keeping a property out of foreclosure, by transferring ownership to a holding company, you simulataneously keep track of the ongoing worth and profitability of the asset. The seller also raises money by offloading a valuable asset to a buyer that is presumably interested in making a long-term secured investment. This is extremely effective for larger ticket items like multimillion dollars homes.
CAUTION:
This is not a 1031- Exchange and you must be careful of transferring anything to anyone without a rock-solid agreement. Also, you lose immediate cash flow due to the net rental yields. Leaseback agreements typically last for a duration of 10 years or more.
