Property Valuation
What is 'sale-leaseback' in Rhode Island real estate and how is it valued?
AA sale where the seller immediately leases the property back from the buyer; the value depends on the lease terms and the property's investment value as a leased asset✓ Correct
BA failed sale where the seller takes the property back
CA government program for affordable housing
DA lease that converts to a sale after the lease term
Explanation
In a sale-leaseback, the owner sells the property and simultaneously leases it back from the buyer (now the owner-landlord). The value to the investor depends on the credit quality of the tenant, lease terms, and cap rate applied to the rental income.
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Key Terms to Know
Capitalization Rate (Cap Rate)
A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Math Concepts
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