A sales leaseback is a tool often used by property owners to access their equity without losing the functional use of the space. The process is as simple as it seems from the name. A property of any kind is then sold and leased by the seller from the buyer (new owner) for their ongoing use. Most often, this type of transaction includes both sales and leasing in the original documentation. It is important to remember that the right to use the property remains with the seller / lessee under the documented agreement.
The reason why people enter into this type of transaction is also simple. The seller needs / wants the money but wants to stay in the room. Maybe the seller has run out of the tax benefits of ownership and will use the money to expand their business, invest in other property or eliminate other debt.
The buyer will get a property with a known safe tenant and an acceptable cash flow based on their investment. The buyer also reaps the tax benefits of depreciation and interest deductions. In most cases, these transactions are between known entities and work well as a win-win proposition. However, it is important that the selling price and rental prices are market prices to avoid questions about the legitimacy of the transaction. You will be amazed at how many of these transactions take place each year and how many people have good secure investments and ongoing business because of this simple technique. The opportunities are out there if you are willing to go out and look for them.