What are the main reasons that corporations may choose to own real estate? What factors tend to make leasing more desirable that owning?
Question 1:
What are the main reasons that corporations may choose to own real estate? What factors tend to make leasing more desirable that owning?
Student 1:
The main reasons that corporations may choose to own real estate are for the following reasons:
Allows for control of the property: Corporations might opt to own real estate when they plan on making substantial renovations to the property. If the property was leased, the corporation will need permission to renovate and change the facility to fit your business goals.
Long term costs: Owning a property can be cheaper in the long term without a landlord periodically raising lease prices every year or every few years. Overall owning the property can save a lot of money and you can utilize your extra spaces for other business ventures.
The ability to find a location with appreciating land values: If a corporation has found a location with land values that continue to increase, it is better to get onto the trend of buying this property as land values increases.
Tax Benefits: Purchasing a property can cut your taxes in contrast to having a lease that doesn’t.
A few factors that make leasing more desirable to a corporation rather than owning is if cash flow is an important resource. For a business that needs the cash flow, it will be more logical to lease since upfront costs are less than making a purchase that involves placing a down payment. Corporations will also lease when they don’t want the hassle of maintaining the property and ensuring structural sound of the building. Businesses that require flexible mobility would rather lease than owning a property.
Source:
Deciding Whether to Lease or Buy a Business Facility. Wolters Kluwer. 2020. Accessed (2020 Nov 10). URL: https://www.bizfilings.com/toolkit/research-topics/office-hr/how-to-decide-whether-you-should-lease-or-buy-a-business-facility (Links to an external site.)
Question 2:
Please read the following two short articles on transactional funding for real estate deals. Please bring back something that you learned or found interesting about transactional funding. Please also share whether or not you have utilized transactional funding or would use it in the future.
Why Every Wholesaler Needs Transactional Funding In Their Toolbox
https://www.biggerpockets.com/forums/93/topics/414424-why-every-wholesaler-needs-transactional-funding-in-their-toolbox
How Transactional Funding Works
http://smallbusiness.chron.com/transactional-funding-works-10204.html
