For investors

Invest in the home. Let the builder be the tenant.

A model home leaseback is a newly built, heavily upgraded home (single-family, townhome, or condo) purchased from a homebuilder that immediately leases it back as its on-site sales model under a commercial lease. You close with a corporate tenant, a contracted rent, and a known lease expiration to underwrite against.

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How the transaction works

Six steps, and the sixth is the one people skip.

1
Builder owns the model
Capital sits in a finished, heavily upgraded model home the builder needs for its sales office.
2
Investor purchases it
The home is sold as an income property, not a residence — the sale closes with a tenant already in place.
3
Builder leases it back
A commercial, often NNN-style lease for the balance of the community's sales phase — commonly 12–36 months.
4
Investor receives rent
Contracted rent from a corporate tenant that maintains the home daily because its sales team works there.
5
Builder vacates
At lease end the builder converts the model back to retail finish and hands the keys over.
6
Investor rents, sells or holds
Re-tenant at market rent, sell into the resale market, or hold. This second act must be underwritten up front.

Same asset, two different uses: a sales tool for the builder today, an income property for the investor from day one.

Why investors consider them

You are buying a house, a tenant, a lease, and an exit.

Turnkey and nearly new

The builder's showpiece: upgraded well beyond base spec and maintained daily because the sales team works out of it.

Corporate tenant, commercial lease

Often NNN-style, with the builder covering maintenance and frequently taxes, insurance and HOA. No residential turnover during the term.

Contracted income from day one

Rent begins at closing rather than after a lease-up period, which is why these deals suit tight 1031 calendars.

A planned, datable exit

You know the month the tenant leaves. That lets you underwrite the second half of the deal instead of guessing at it.

Contracted gross yield is not the cap rate

Builder-published yields are usually contracted gross yield: annual leaseback rent divided by purchase price, before any expense. The underwritten NOI cap rate is net operating income — rent less taxes, insurance, HOA, special district assessments and reserves — divided by price. On a typical deal the second number lands one to two points below the first. Every listing on this site shows both.

Who they may suit

Who buys these

Passive buy-and-hold investors

You want contracted rent from a corporate tenant instead of residential tenant turnover.

1031 exchange buyers

You need identifiable, income-producing replacement property that can close on a tight calendar.

High-net-worth individuals and family offices

You want new-construction residential exposure without assembling a rental operation.

Regional investors

You want to concentrate in specific metros where builders run active model programs.

Advisors and brokers

You evaluate residential income property on behalf of clients.

Model leasebacks are not for investors who need liquidity inside the lease term, cannot absorb a lease-up gap after the builder leaves, or are relying on a specific appraisal outcome to finance the purchase.

What every listing includes

Enough to underwrite it yourself.

Lease terms: Term, escalation, renewal options, default and termination language, restoration obligation, and who pays taxes, insurance, HOA and maintenance.
Full underwriting: Contracted gross yield and underwritten NOI cap rate side by side, plus cash-on-cash, DSCR, break-even rent and a hold-period projection.
Rent comps: Recently leased homes nearby so you can compare builder rent to true market rent.
Market data: Population and income trends, rent growth, days on market, and school and amenity context.
Community status: Homesite count, remaining build-out, absorption pace, HOA and special-district costs.
Exit analysis: Estimated post-lease market rent, conversion cost, lease-up gap and residual value.
Builder information: Builder identity, address and sales contact, released when you request an introduction.

What can go wrong

The five risks to underwrite

Appraisal gap

Model homes carry heavy upgrade packages and can appraise below contract price relative to neighborhood comps, which constrains leverage.

Income stops at lease end

The contracted rent ends with the term. If market rent is materially below builder rent, your yield resets downward.

Single-tenant credit concentration

One tenant carries the whole income stream. The lease is only as strong as the builder entity and any guarantor behind it.

Conversion and lease-up cost

Turning a decorated model into a rentable or sellable home costs real money and takes real time.

Community and absorption risk

A slow or early-finished community changes how long the model stays in service and what the resale market looks like at exit.

Due diligence checklist Financing guide 1031 considerations

Example underwriting

See the whole model on a sample deal.

Our illustrative listing shows the complete underwriting experience: contracted gross yield versus underwritten NOI cap rate, break-even rent, an editable assumptions panel, base, moderate downside and severe downside scenarios, post-lease economics, and a plain list of reasons the deal might not work.

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1031 and financing, briefly

Model leasebacks are often attractive to investors completing a 1031 exchange because they close as income-producing real property with a tenant already in place. Eligibility depends on your specific facts — property held primarily for sale does not qualify — so confirm treatment with a qualified intermediary and your tax advisor. Nothing here is tax advice.

Financing is deal-specific. Some buyers pay cash, some use investment-property or DSCR loans, and the upgrade premium in a model home can create an appraisal gap that lowers usable leverage. Ask lenders how they treat a commercial leaseback on a single residential asset before you go under contract.