Rental and Lease Alternative
Sources To
Institutional
Lenders...
Rental properties
and leases
are a means of
financing real
estate even though
tenants do not
acquire fee
ownership. Whether
the tenant is a
bachelor receiving
the use of a $60,000
apartment for which
he pays $650 rent
per month, or a
large corporation
leasing a warehouse
for 20 years,
leasing is an ideal
method of financing
when the tenant does
not want to buy,
cannot raise the
funds to buy, or
prefers to invest
available funds
elsewhere.
Similarly, farming
leases provide for
the use of land
without the need to
purchase it.
Although some farm
leases call for
fixed rental
payments, the more
common arrangement
is for the farmer to
pay the landowner or
landlord a
share of the value
of the crop that is
actually
produced-say 25%.
Thus, the landowner
shares with the
farmer the risks of
weather, crop
output, and
prices.
Under a sale and
leaseback
arrangement, an
owner-occupant sells
the property and
then remains as a
tenant. Thus, the
buyer acquires an
investment and the
seller obtains
capital for other
purposes while
retaining the use of
the property. A
variation is for the
tenant to order a
building
constructed, sell it
to a prearranged
buyer, and lease it
back upon
completion.
Rental
To Seller Financing
|
