Guides
Learn how model home leasebacks actually work.
Straightforward explanations for investors evaluating their first model leaseback and for builders considering a program. No hype, no guarantees — just how the structure works and where the risk sits.
What is a model home leaseback?
The structure explained end to end: who the parties are, how the lease is written, and what actually transfers at closing.
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How to underwrite model home leaseback returns
Cap rate, cash-on-cash, DSCR, appraisal gaps, and residual value — the numbers that decide whether a model leaseback pencils.
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Why homebuilders use model home leasebacks
Capital recycling, balance sheet treatment, and keeping the sales office open — the builder's side of the trade.
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Model home leaseback vs. traditional rental property
Tenant quality, management load, financing, exit options, and risk compared side by side.
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Financing a model home leaseback
Cash, conventional and DSCR options, residential vs. commercial treatment, appraisal gaps, and the questions to ask a lender first.
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How model home appraisals work
Why the upgrade premium rarely appraises at cost, how sales-office modifications are treated, and how to protect against a gap.
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Reading the lease: what NNN actually means
Expense allocation, guarantor credit, restoration, early termination, extensions, assignment, SNDA and estoppel — clause by clause.
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What happens when the builder's lease ends
Restoration, conversion cost, the lease-up gap and the rent reset — the second half of the deal, where returns are made or lost.
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Estimating post-lease market rent
A practical method: comp selection, adjustments, HOA limits, leasing seasonality, and the expenses that come back to you.
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Model home leasebacks and 1031 exchanges
Why exchange buyers favor tenant-in-place assets, how the 45- and 180-day windows constrain you, plus debt replacement and boot.
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The real risks — and how to price them
Ten risks from appraisal gaps to concentration, each with a practical mitigation and a scenario framework to test them.
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Model home disposition strategies for builders
Hold, retail sale, sale-leaseback or portfolio disposition — compared on capital, timing, control and privacy.
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