Best Home Sale Leaseback Options of 2019

For many homeowners, a substantial amount of wealth is tied up in their house. This can become a problem if you need cash to pay for a major expense, such as medical care or a child’s college education.

There are different ways to get money out of your house, including home equity loans where you borrow against your home’s value and pay back the loan. But there’s also another lesser-known option: a home sale leaseback agreement.

In a home sale leaseback agreement—also known as residential leaseback agreement—you actually sell your house, so you can completely cash out. But unlike a typical home sale, you continue to live in the home as a renter.

This way, you can access a large amount of cash without uprooting your family, and you’re usually no longer responsible for property taxes or other ownership costs associated with owning a home. If you think selling your home and leasing it back may be a good option for you, this guide can help you understand your options.

On this page:

• 3 Home Sale Leaseback Options to Consider
• Benefits of Home Sale Leasebacks
• Downsides of Home Sale Leasebacks
• Home Sale Leasebacks vs Reverse Mortgages

3 Home Sale Leaseback Options to Consider

Here are three home sale leaseback companies you could consider. Click on a lender to jump down to their review.

• Figure
• Rentback
• Easyknock

Figure

Figure pays up to 92% of the appraised value of your home if you enter into a leaseback agreement. You can sell your house without any hassle and have the option to stay as long as you would like as long as you continue to make rent payments. Figure pays property taxes, insurance, HOA fees, maintenance, and repair costs.

Here are some of the details you need to know about a home sale leaseback option with Figure.

• Minimum home value: N/A
• Required loan-to-value: No maximum, but financials work best with 0% to 30% mortgage debt
• Typical time to funding: Not provided
• Lease lengths: Minimum 1-year lease; no maximum
• Credit requirement: 620
• Typical rent: varies by market
• LendEDU rating: 5.00 / 5.00

Figure also offers a home equity loan option, which you can learn more about in our Figure home equity loan review.

Rentback

Rentback makes it possible to sell your home to an investor and rent it back. You can close quickly, receive the full value of your home, and you won’t have to pay any fees. There are also no credit or income qualifications that you have to meet.

Here are some of the key details you need to know about Rentback. 

• Minimum home value: N/A
• Required loan-to-value:  You must owe less than your home is worth
• Typical time to funding: 45 days
• Lease lengths: You can generally stay for years by renewing your lease
• Credit requirement: No credit or income qualifications
• Typical rent: Comparable with rental prices of nearby homes
• LendEDU rating: 4.22 / 5.00

Easyknock

Easyknock’s home sale leaseback option is called Sell and Stay. You can sell your home, rent it out, and you’re given the option to repurchase your house any time while you are renting it. You can quickly access between $60,000 and $450,000, and your contract will be customized to you. Here is what you need to know about the home sale leaseback option from EasyKnock.

• Minimum home value: N/A
• Required loan-to-value: N/A
• Typical time to funding: Less than 2 weeks.
• Lease lengths: 12-month lease; lease can be renewed for up to five years
• Credit requirement: No minimum credit score
• Typical rent: 9.5% of home value annually
• LendEDU rating: 3.83 / 5.00

How We Got Our Ratings

We ranked and rated the top residential leaseback companies based on the weighted average of seven data points:

You can read more about our methodology here.

Benefits of Home Sale Leasebacks

If you are considering a home sale leaseback, there are some substantial benefits to be aware of. Some of the advantages include:

• The ability to free up cash: If much of your wealth is tied up in home equity, you can sell your home to access that money for other purposes, such as investing or starting a business.
• Cushioning against real estate market downturns: If you think the value of real estate will fall in your area, selling your home to cash out the equity can make a lot of sense.
• No more homeownership costs: You can continue to stay put in your house while no longer having to worry about all of the costs of homeownership. You won’t have to be responsible for maintenance, homeowner’s insurance, or property taxes anymore.
• Quick closing: You don’t have to worry about finding a buyer, selling your house, and waiting for the transaction to close. Most companies offering home sale lease backs will buy your home quickly—usually in a matter of weeks instead of months.

Downsides of Home Sale Leasebacks

Despite the benefits, the many downsides of home sale leasebacks cannot be understated. Some of the negatives of home sale lease backs include the following:

• You no longer benefit from the appreciation of your home: If your home goes up in value, the company you sold it to benefits—not you.
• You have to pay some closing costs and fees. Costs vary by lender, but as with any home sale, you’ll need to cover some of the closing fees.
• You may not get to sell for the full value of your home. Selling your home to a regular buyer might provide you with more cash upfront for your house—but probably without the option to stay in it.
• Your rent payments no longer build equity. When you pay down a mortgage, you acquire more equity in your home and eventually will own the house free-and-clear. This is no longer possible after you have sold your home to a home sale leaseback company.
• Rent may be high. Generally, home sale leaseback companies claim they’ll charge you market rates to rent back your home. However, those rent payments may be more than the payments you were making on your mortgage, and you should also compare the rent you’re offered with rents in other local neighborhoods to make sure you’re being charged a fair price.

You need to think carefully about whether a home sale leaseback is worth all of these downsides or whether you might be better off with a home equity loan or simply listing your home on the open market.

Home Sale Leasebacks vs Reverse Mortgages

Both home sale leasebacks and reverse mortgages are methods for getting equity out of your home will still living in it. But they work differently.

• Reverse mortgages are only available to seniors. This isn’t the case for home sale leasebacks.
• More government regulations govern reverse mortgages, so there is less flexibility but more protection for homeowners
• You’re usually allowed to stay in your house for the rest of your life with a reverse mortgage, but that’s not always the case with a home sale leaseback
• Reverse mortgages may allow homeowners to obtain equity from their homes in a lump sum, through a line of credit, or through monthly payments. Home sale leasebacks usually provide a lump sum up front for the purchase of the home

If you aren’t yet a senior, only a home sale leaseback will be available to you. If you’re older, you’ll need to choose between a home sale leaseback, a good reverse mortgage, and other home equity products.

>> Read More: Best Reverse Mortgage Lenders

Bottom Line: Is a Residential Leaseback Agreement Right for You?

Residential leaseback agreements can be a good option if you need to sell your house but want to stay in it. You also benefit from no longer being responsible for ownership costs, like taxes and maintenance expenses. But the fact that you may not get the full value of your home could be a deal-breaker for some homeowners.

Make sure you carefully weigh the pros and cons before deciding a residential leaseback agreement is right for you.