Sale-Leaseback Market Breakdown
Demographics of customers entering into agreements, geographic dispersion for EasyKnock and Truehold, and more.
Executive Summary
Sale-leaseback products allow homeowners to get cash by selling their homes while continuing to live in the property through a leasing arrangement. These products have been increasing in popularity, with EasyKnock and Truehold purchasing thousands of homes in the past few years.
Leading providers of sale-leaseback products include EasyKnock, Truehold, Sell2Rent, and StayFrank. While EasyKnock has a nationwide presence, Truehold has operated primarily in the Midwest where yields are likely to be higher.
At the end of the post, detailed information is available breaking down the demographics of EasyKnock and Truehold customers using individual-level demographic data linked to past transactions.
Introduction
Sale-leaseback products are financial arrangements where a homeowner sells their home but continues to live in the property by taking on a lease for it. This arrangement allows homeowners to convert their home equity into cash while they continue to live in their home as tenants. The lease agreement typically ensures that the homeowner can remain in the property for a set period, providing stability and predictability.
Some of the benefits to consumers include:
Immediate Access to Equity: Homeowners receive a lump sum of cash upfront, providing immediate liquidity for various purposes, such as debt consolidation, medical expenses, or home improvements.
Stay in Home: Homeowners can access their home's equity without needing to move, maintaining their community ties and avoiding the hassle and emotional toll of relocating.
No Credit Requirement: Unlike traditional loans, sale-leaseback arrangements are not dependent on the homeowner's credit score, making them accessible to a wider range of homeowners.
Sale-leaseback products are different from other home equity access methods like Home Equity Investments (HEIs), Home Equity Lines of Credit (HELOCs), and traditional home equity loans.
Compared to HEIs: While both sale-leaseback programs and HEIs allow homeowners to tap into their home equity without moving, sale-leaseback programs involve selling the property and then leasing it back, whereas HEIs involve selling a portion of the home's equity. In sale-leaseback arrangements, homeowners become tenants, while in HEIs, homeowners retain ownership and share the future appreciation with the investor.
Compared to HELOCs: HELOCs are revolving credit lines secured by the home's equity, requiring homeowners to make monthly payments with interest on the amount drawn. In contrast, sale-leaseback programs provide a lump sum without monthly debt payments, but homeowners transition from owner to tenant.
Benefits and Drawbacks: Sale-leaseback programs offer stability and immediate liquidity but involve relinquishing ownership of the property. HELOCs maintain homeownership and equity appreciation potential but come with the burden of monthly payments and interest charges.
Data Overview
At SFR Analytics, we leverage nationwide deed and assessor data to track the residential real estate market. To generate this analysis, we’ve identified and reconciled the entities that various sale-leaseback operators have originated agreements under.
Analysis & Results
Geographic Distribution
EasyKnock
EasyKock has a nationwide presence, transacting in most states throughout the country.
Truehold
In contrast to EasyKnock, Truehold has a more narrowly focused distribution of operation, primarily transacting in the Midwest.
Combined
The combined map of EasyKnock (Blue/Green/Red) and Truehold (Yellow/Purple) shows the heavy tilt towards the Southeast and Midwest for the sale-leaseback market to date.
Property Characteristics
Meaningful differences exist in the characteristics of properties purchased by EasyKnock compared to Truehold. Some of these differences can be explained in the difference in geographic focus between the two. EasyKnock has completed many more transactions than Truehold, which may give a more reliable insight into the strategy the company pursues.
EasyKnock has tended to acquire higher priced homes compared to Truehold, with a median purchase price of $245k compared to $165k for Truehold.
EasyKnock has tended to acquire larger properties than Truehold, with a median square footage of 1,648 compared to a median square footage of 1,449 for properties acquired by Truehold.
EasyKnock has tended to acquire properties that were built much more recently than properties acquired by Truehold. The median year built of properties acquired by EasyKnock is 1983, compared to a median year built of 1965 for Truehold.
Demographics
Access to individual demographic-level data supports further segmenting market activity to look at the type of individual who has entered into sale-leaseback agreements. In the section below, we take a closer look at the background of customers who sold to EasyKnock and Truehold.
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