There are two inevitable truths in the world of housing. The first is that everyone needs somewhere to live. The second is that not everyone has somewhere to live. Hundreds of startups failed during the pandemic. This may have been due to the inability to adapt to a digital working environment, or simply due to that the financials behind the operation were ravaged by lockdowns. Nevertheless, business owners lost a lot of money. But if you are truly an entrepreneur, you don’t quit at failure, you find a way. You have no money, but you have a property.
Currently, home equity loans and cash-out refinances are the most common ways for homeowners to tap into their home’s equity without moving out. However, these forms of refinancing usually hold strict requirements, especially for people with low credit scores.
The guidelines for a Mortgage Refinancing are: (According to Rocket Mortgage)
One (or more) doesn’t apply to you? That’s unfortunate. The other common options are either to sell your home or to put it up for rent. Even so, this process takes time and has other costs associated with it, not taking into consideration that you would have to look for another place to live. There has to be an alternative to selling or renting.
Leasebacks. A simple way to sell your home, free up that equity, and stay as a renter. A way for entrepreneurs to revamp their startups from the same garage. A leaseback isn’t unique to entrepreneurs – or anyone at all. This method applies to current employees, those who work on-site, and those whose jobs just became fully remote. Leaseback agreements can help everyone with a property under their name free up equity. A spin is past due in the static world of real estate. Simply buying and selling won’t cut it in today’s faster-than-ever world. A turning of the tables is coming and leasebacks will be a part of it.
Even after the exponential growth of online working platforms like Google Meets and co-working spaces like WeWork, relocation due to employment is still the most common reason for people to move out of their homes. If an employee doesn’t have the equity to buy another home, a firm start date means they’ll have to sell their home as quickly as possible in a fluctuating market. This won’t happen when leasebacks are adopted since you can sell before you move out, long before. The homeowner sells to rent when the market is doing well, before the job offer even comes, and is quick on his feet as soon as it does.
A lot of businesses have applied a completely remote approach, making people reevaluate their living situations. If you don’t need to move out to change jobs, the question changes from where do you need to live to where do you want to live?
This is where the idea of rent becomes appealing. Rent doesn’t bind you to a multi-decade mortgage, and you don’t need to afford the home to live in it. You can roam New York’s upper east side for a year, and then wake up with a coffee in an alpine hut the next. You also have the freedom to not be sure. You could sell the house you live in through a leaseback, start paying rent and just stay home. You’ve suddenly unlocked more money and more time.
This type of flexibility is one of the reasons that sale-leasebacks are becoming more common in every way. Businesses have been doing this for decades. Selling their office space to free up capital without leaving the office. This allows companies to invest that equity in expanding their business. When it comes to homes, a sale-leaseback helps you avoid relocating yourself by relocating your money instead.
According to Investopedia, the average American mortgage owner holds over $185,000 in equity. Companies like Sell2Rent are committed to easing and spreading the idea of leasebacks to Americans. This trend could prove beneficial for economic reasons, but it’s especially helpful for societal reasons. Freeing up this equity could help keep kids in school, send others to college, help more retire, and let you build that promising startup – stress-free.