Real Estate Lease/buy

Hi All,

I'm looking at a specialty construction business in which the real estate is also available for either sale or lease. My preference is to lease (at least at first), but how should I be thinking about evaluating terms? I get the sense based on real estate-only listings in the area that the payment amount the seller is asking for is high for the region/type of facility (but I'm no expert and I know that small variances in location, etc. mean a lot). Then again I'm not sure it's worth "spending" goodwill negotiating something that, for context, is on the order of 10% of SDE.

Also, how should I think about whether a sale-leaseback might make sense (seeing as purchasing the building is an option)?

Thanks in advance for any thoughts.

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searcher Texas A&M University - 04/09/2021

Start here, as ^[redacted]‌ mentions 504 loans may be a good route AND as ^[redacted]‌ mentions, there is a potentially great deal to be had with SBA if real estate is 51% of deal:
https://www.searchfunder.com/post/anyone-have-experience-with-acquiring-real-estate-along-with-the-business

Then here, ^[red

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investor The University of Chicago - Booth School of Business - 04/09/2021

The decision to purchase (now or later) should be driven by i.) the long-term suitability and capacity of the property for the operating co. and ii.) the appeal of the property to others in the event the exiting lessee moves or implodes. The property would be of no or limited interest to the prof. RE investment community in the absence of ii.).

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searcher Calvin College - 04/09/2021

Similar to what Walt highlights, we've found from a deal dynamic standpoint, it can make sense to simply agree to a short-term lease, with a few renewal options. The short-term lease will allow you enough time to be in the business and evaluate its growth potential--you may find you want a different location, need a larger warehouse, etc. Similarly, you can then take advantage of a 504 loan if you determine you would like to stay. Finally, now that you've crossed the hurdle of owning the company

lender University of Missouri - Columbia - 04/09/2021

Lots of reasons to buy and to pass on real estate. A lot of people look at their owner occupied real estate as an investment. That can be the case but[redacted]showed that it can be an anchor as well. Eric and Walt makes good points in that you want to make sure if you are buying that you don't have to move in the next couple of years unless you want to. That can be cost prohibitive and an unwanted distraction as you are learning the business. On the flip side, owning the building gives you

REAL ESTATE LEASE/BUY

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