JIM LIEBERTHAL, SIOR | CUTLER COMMERCIAL

6 Advantages to a Sale Leaseback for Seller & Buyer

A sale lease back occurs when a property owner sells property to an investor while agreeing to lease back the property for a mutually acceptable rental rate and term.

Seller Advantages:

  1. To stay in current location and avoid cost of relocating.
  2. Free up cash to put into business, business acquisitions, working capital or into seller’s pocket.
  3. Offer seller financing earning cashflow and interest while reducing upfront capital gains.
  4. Control cashflows by structuring rental payments that meet company goals.
  5. Remove a debt from the company’s balance sheet which may provide opportunities to borrow. for business opportunities.
  6. Depending on type of lease, reduce some of the financial responsibilities for building maintenance.

Buyer Advantages:

  1. Guaranteed income and cashflow from day one of ownership.
  2. Ownership of a possible appreciating asset.
  3. Negotiating favorable terms in case of default.
  4. If financing through a bank, the bank may provide better rates and terms with a qualified tenant in place.
  5. Predicable rate of returns.
  6. Depending on type of lease, buyer may have tenant fully responsible for all maintenance, taxes and insurance.
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The Lieberthal Team

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