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  Key Points
  
  -. Sale-leaseback frees up capital for sellers while ensuring they can still utilize the residential or commercial property.
  -. Buyers acquire a residential or commercial property with an instant cash flow via a long-term tenant.
  -. Such deals help sellers invest capital somewhere else and stabilize costs. -. Investor Alert: Our 10 best stocks to buy right now 'A sale-leaseback transaction enables owners of genuine residential or commercial property, like realty, to maximize the balance sheet capital they've invested in an asset without losing the ability to continue utilizing it. The seller can then use that capital for other things while the purchaser owns an instantly cash-flowing possession.
  
  What is it?
  
  What is a sale-leaseback transaction?
  
  A sale-and-leaseback, also known as a sale-leaseback or simply a leaseback, is a monetary transaction where an owner of a property sells it and then leases it back from the brand-new owner. In realty, a leaseback allows the owner-occupant of a residential or commercial property to sell it to an investor-landlord while continuing to occupy the residential or commercial property. The seller then ends up being a lessee of the residential or commercial property while the buyer becomes the lessor.
  
  How does it work?
  
  How does a sale-leaseback transaction work?
  
  A real estate leaseback transaction consists of 2 associated agreements:
  
  - The residential or commercial property's current owner-occupier consents to offer the possession to an investor for a fixed cost.
  - The brand-new owner consents to lease the residential or commercial property back to the existing resident under a long-term leaseback contract, consequently ending up being a landlord.
  This deal enables a seller to stay an occupant of a residential or commercial property while moving ownership of a property to a financier. The purchaser, meanwhile, is purchasing a residential or commercial property with a long-term tenant already in location, so that they can begin producing capital instantly.
  
  Why are they used?
  
  Why would you do a sale-leaseback?
  
  A sale-leaseback transaction benefits both the seller and the purchaser of a residential or commercial property. Benefits to the seller/lessee include:
  
  - The ability to free up balance sheet capital purchased a real estate possession to fund business expansion, lower debt, or return cash to financiers.
  - The ability to continue inhabiting the residential or commercial property.
  - A long-lasting lease arrangement that locks in expenditures.
  - The capability to deduct lease payments as an overhead.
  Likewise, the purchaser/lessor likewise experiences numerous advantages from a leaseback deal, including:
  
  - Ownership of a cash-flowing possession, backed by a long-term lease.
  - Ownership of a residential or commercial property with a long-term lease to an occupant that needs it to support its operations.
  - The ability to subtract depreciation costs on the residential or commercial property on their income taxes.
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