What Is a Credit Tenant Lease?

A credit tenant lease is a type of financial transaction that is used by landlords in order to purchase rental property. With this type of arrangement, landlords typically have to locate investment grade tenants to make the transaction work.

With a credit tenant lease, a landlord will borrow money from a commercial lender for the purpose of purchasing a rental property. They will use the money to buy the property and will negotiate a lease with an investment grade tenant. The landlord will then start to collect rent from the tenant and will use that rent to pay for the payments on the loan.

In order to make this work, the landlord generally have to have some type of an agreement with a quality tenant. The tenant in many cases has to be an established business such as a franchise or a well-known business. They also typically have to agree to a long-term lease arrangement so that the lender will have some assurances that their payments will be made.

In most cases, the lease between the landlord and the tenant will be set up as a triple net lease. This means that the tenant takes care of the taxes, insurance, and maintenance on the property.

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