Benefits of a Model Leaseback

Benefits of a Model Leaseback
  • Written on September 28, 2021 By Stanley Martin

Model homes represent many of the best parts of homeownership. They’re shiny and new, chock full of wonderful upgrades, and decorated perfectly, like it came straight out of a magazine. They’re the ideal home. What you may not have known is that these homes are actually available for purchase. Some may call it one of the best kept real estate investment secrets, and availability of these homes typically only travels by word of mouth - and then they sell. Fast.

If you're wondering, "what is a model home leaseback?" the answer is simple. A model leaseback is when a homebuilder sells one of their homes and agrees to lease it back for a period of time. The home would continue its use as a model or showcase home while the builder finishes selling in the neighborhood.

There are many reasons why people are investing in Stanley Martin model homes. Some of the benefits are more obvious like:

Location
Models are usually built in locations within the neighborhood that are easy to get to and on ideal homesites. If you’re considering a neighborhood but are not quite ready to move yet, a model leaseback provides an opportunity to secure your future home in a great location.

Features
Often built to include many of the most attractive upgrades available and envy worthy features, model homes are the best examples of a home’s design and can come at a more reasonable price than building a new home.

Decorations
Our model homes are decorated by professional interior designers and many times buyers have the opportunity to purchase the furnishings at a discount with the purchase of the home.

But in addition to the amazing exterior benefits, some of the most compelling benefits are actually unexpected:

Lease-back opportunity
The mortgage on the home could be covered by receiving rental income from Stanley Martin during the leaseback period, and depending on the financials of your deal, you could be making money right out the gate. If the thought of being a landlord makes you cringe, there’s no need to worry! With the builder as your tenant, you can count on it maintaining its pristine condition, after all, the models are prized property made to showcase the neighborhood. And the builder will have access to the appropriate vendors to address any issues that do arise.

Long term investment
When you make this purchase, you lock in your interest rate. And you can choose to keep the home as a rental property after Stanley Martin's lease ends* and continue to receive a monthly rental income - or keep this dream home as your personal residence.

Real estate tax breaks
Just like any other real estate investment, deductions are possible for "ordinary" expenses such as mortgage interest, property tax, depreciation, and repairs, as well as "necessary" expenses such as interest, maintenance, utilities and insurance. Of course, you would need to speak with your tax or financial advisor for a complete list of the tax breaks.

Long and short term capital gains
If you do decide to sell the property, there's a chance it will sell for more than you purchased it for. And, depending on the length of time you own the property, you could benefit from a reduced tax rate or even quality for a zero percent long-term capital gains rate. Again, you will want to speak with your tax or financial advisor about this.

Interested in purchasing a model leaseback? Good! Because we're excited to share with you the Stanley Martin model homes that are available for sale. Visit our website to learn more.

*Subject to applicable law and HOA/Subdivision documents.