Sale leaseback 10 year lease

[Paul Ferrara]

Hi all: i found a few of these on LoopNet in Georgia. It’s a. 10 year sale leaseback at $2500 a month , 360k selling price , buyer only pays annual taxes. The tenant is a vacation rental company who manages the property. What are your thoughts on this? Should the legality of vacation rentals be any concern ? Don’t like the idea of not being able to raise rent for 10 years though but the cap and cash flow are high and consistent .. . http://www.loopnet.com/Listing/21548777 Thank you !

[Jason Dillard]

You can negotiate your terms on the lease back.  

Always assume the leaseback tenant will fail.  If the market rent is not comparable to the lease back, if you have to rent the house out yourself, you may have negative cash flow.

Same thing applies to the value.  Make sure their value is in line with the true market value.