A life lease is a rental arrangement where the tenant makes a cash contribution called an entrance fee at the start of their tenancy. When the tenancy ends, the full entrance fee is returned to the tenant (or their estate in the event of death).
The entrance fee is held in trust by a third party trust company. The developer is not able to use or access that money, however they can borrow against it to complete the project with less equity than would be required under a traditional multi-family residential construction project. The developer must also contribute a certain amount of entrance fees to be held in trust as a float in the event of multiple move outs.
The benefits of a life lease include:
- Tenants find they are part of a community of likeminded people with common interests and of similar age and values.
- The rent is reasonable and their entry fee is safe from fluctuations in the real estate or investment markets.
- The entrance fee generally allows for tenants who care for the property and take pride in the appearance of their community.
- If circumstances change in a tenant’s life, only three months’ notice is required to move out and have the full entrance fee returned. This gives tenants piece of mind instead of having to worry about selling their home if they wish to relocate.
- Although the entrance fee is not earning interest, the contribution itself helps by saving monthly rent as a portion of the equity required for the project is funded by the tenants.
Brandon’s Newest Life Lease Community, “The Summit” is available now to lease! These suites range from 1048 sq ft and up to 1523 sq ft plus a secured storage room and spacious balcony. Come be part of this beautiful Community!