Sellers, do a “Conrad Black”—financial planner
The recent transaction surrounding former media tycoon Conrad Black’s mansion—which has been valued at an estimated $22 million by Concierge Auctions—has opened the possibility of a new strategy that prospective sellers might consider: renting back a property even after its sale has been completed.
According to spokespersons, Black has already been paid for the deal, but he would remain as a paying renter in the Bridle Path, Toronto estate.
Financial planner Shannon Lee Simmons said that this leaseback arrangement comes with a host of unique advantages, especially for baby boomer owners who have accumulated a substantial amount of equity in their decades-old homes.
“I think what Conrad Black has done is innovative and very cool. If you’re selling your house and it’s been your primary residence, it’s a tax-free shot to your portfolio,” Simmons told Metro News.
“So many retirees don’t want to downsize because they’re emotionally invested in the homes where they raised their kids and they have visions of grandbabies coming over. So, this is a cool, creative solution around that where you still cash-in on all the money,” she noted.
Other observers agreed with the validity of this tactic, with the caveat that finalized contracts with buyers and other factors should be taken into account.
“Yes, they’ll have access to the equity of the home, but what is the lease rate they’ll have to pay and what’s the term?” Castlemark Wealth Management president Robyn Thompson said, adding that professional assistance from realtors and lawyers is a must in these agreements.