Most landlords I know own their own home and have raised enough capital to buy other homes to rent out. It's a great idea. Get someone else to pay your mortgage while you maintain ownership of the real estate. And because real estate over the long term tends to appreciate, this approach can result in terrific profits.

Motley Fool Income Investor holding American Financial Realty Trust (NYSE:AFR) twists this idea further. It buys the real estate that bank branches sit on, then leases back the land to the bank so it can continue operations at that site. The bank pays American Financial's mortgage, while the REIT gets to hold the (presumably appreciable) property.

But what's in it for banks, such as Wachovia (NYSE:WB) and KeyCorp (NYSE:KEY)? It allows them to get rid of expenses associated with real estate ownership and plow the savings back into their core operating businesses. Furthermore, the banking industry has been consolidating, and that trend is continuing. Larger acquiring banks can sell surplus bank branches that other banks will seek to lease as they expand their market presence.

All this allows banks to improve liquidity, eliminate depreciation expense associated with owning real estate, avoid regulatory concerns, and increase earnings and key financial ratios. It's win-win all around. (Income Investor editor Mathew Emmert expounds more on this concept if you need more details.)

Is there a downside? I can think of two. First, Bank of America (NYSE:BAC) was one of the IPO underwriters, and American Financial has done an awful lot of sale-leasebacks with it. I'm not alleging anything here, but if a potential conflict of interest does exist, investors should investigate the sales prices of those Bank of America branches closely. And the REIT was formed by purchasing property from its own principals, which is something to be aware of.

The other downside is potential short-term real estate risk. If, for some reason, the company needs to dispose of real estate quickly in an unfavorable market, shareholders would be hurt. Also, if it buys property in a crummy area that does not appreciate as expected, they'll be left holding the bag.

As with all investments, particularly with ones involving banks, it behooves you to really dive into the company's 10-K. But from my perspective, American Financial is not an investment I'll be making a withdrawal from anytime soon.

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Want to get into the landlord business? Better have a look at the Fool's Home Center first.

Fool contributor Lawrence Meyers owns shares of American Financial Realty and wishes he was Snidely Whiplash so he could demand the rent.