Commercial Real Estate – Going From Leasehold To Ownership
If you’re currently leasing your commercial premises and the property becomes available for sale, should you buy or remain a leaseholder? It’s a difficult question yet in the current environment, it is one that is being seen on a daily basis. Like all issues related to real estate ownership, there is no simple answer.
There are two important considerations. The first is the success of your business in its current location. If you’re one of the few businesses that is really thriving then turning your profits into an large asset like property ownership could be a smart move. Of course, the question then is whether that property ownership should be your current premises or investment properties elsewhere. That’s a business decision that you will need to make.
The second consideration is the new owners. What are their intentions? This can often be a difficult situation, especially if the new owners have longer term plans. Fortunately for you as a leaseholder, you do have some protection in the form of your lease. There are other protections as well.
If you decide that buying could be in your best interest, you have two choices. To negotiate outright to buy, or to wait until another buyer makes an offer. Once an offer is made, you as the tenant generally have first right of refusal to buy at that price. It can be a big decision, but the current environment does lean towards buying.
Interest rates are down, property prices are down and some sellers are reaching a point where a sale is a necessity, not a desire. As a leaseholder, you may find you can convert that lease into ownership at a good price and thus guarantee the future of your business.
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