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Buy, Build, or Lease?

Buy, Build, or Lease?. Buying and Building. Requires capital May be difficult to find a good place Many locations like malls and strip centers only allow leasing. Lease. Contract between a landlord and a tenant Specific amount of time Specific amount of rent Other terms of a lease:

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Buy, Build, or Lease?

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  1. Buy, Build, or Lease?

  2. Buying and Building • Requires capital • May be difficult to find a good place • Many locations like malls and strip centers only allow leasing

  3. Lease • Contract between a landlord and a tenant • Specific amount of time • Specific amount of rent • Other terms of a lease: • Services provided by the landlord • Provisions for a renewing the lease • Good to have a lawyer review the lease with you

  4. Types of Leases Fixed Rate Percentage Triple net

  5. Fixed Rate Leases • Specific amount of rent each month • Does not change • Easier to budget • Not widely used for business leases

  6. Percentage Lease • Rent amount is based on a portion of the sales generated by the business • Used more often • Some use a maximum amount • Others use a sliding scale • RENT goes down as sales go up • 4% on sales up to $100,000 • 3% on sales over $100,000 • Often charge an additional maintenance fee

  7. Triple Net (NNN) Lease • Charges the tenant rent plus the three operating costs of the rented property • Insurance • Maintenance and Utilities • Property Taxes • The part for rent might be fixed or a percentage • This type of lease provides the landlord with net rent because the tenant pays for the property’s expenses

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