LEASEBACK COMEBACK

Real estate professionals in some parts of the nation report increased interest in sale-leaseback deals, in which homeowners sell their properties to family members or investors and then rent them back from the new owners. The arrangement allows sellers to avoid foreclosure without moving, and it allows investors to wait for the market to rebound. However, all parties need to consider the tax consequences of a leaseback agreement; and relatives need to consider how their relationships will be affected if the lease payments are not made. Additionally, some experts note that cash-strapped homeowners might not even be able to afford the rent on these properties; and others point out that the homes often are no longer worth what the sellers originally paid for them.

Source: Wall Street Journal (07/16/08) P. D3; Mincer, Jilian
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