The most prestigious law school admissions discussion board in the world.
|
 |
 
|
Why do so many businesses lease buildings instead of buying them
Poast new message in this thread
Date: October 20th, 2019 3:50 PM Author: cobalt diverse stage Seems like a waste of $ (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004026) |
 |
Date: January 29th, 2026 3:11 PM Author: napoleone I have clients who own fast food restaurants and gas stations. I always recommend they buy their real estate so they have something to sell down the road. (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#49630967) |
Date: October 20th, 2019 3:51 PM Author: Concupiscible chapel immigrant tax write offs i believe and bad capital allocation (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004028) |
|
Date: October 20th, 2019 3:52 PM Author: turquoise big affirmative action toaster Many businesses aren’t in the business of holding commercial real estate. (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004032) |
|
Date: October 20th, 2019 3:53 PM Author: cobalt diverse stage Too many idiots not thinking long term (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004034) |
|
Date: October 20th, 2019 3:56 PM Author: Vibrant ticket booth It's likely more productive for them to re-invest back into the business versus getting into the property ownership game. (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004049) |
|
Date: October 20th, 2019 4:01 PM Author: cobalt diverse stage It isnt (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004081) |
|
Date: October 20th, 2019 4:07 PM Author: Vibrant ticket booth You seem dumb. Owning property comes with a million headaches and risks. The vast majority of businesses can't handle either. (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004118) |
|
Date: October 20th, 2019 4:15 PM Author: cobalt diverse stage Ljl but some powergoy landlord can handle them NBD (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004162) |
|
Date: October 20th, 2019 4:16 PM Author: Vibrant ticket booth Okay, so you are dumb. Just making sure! (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004163) |
|
Date: October 20th, 2019 5:26 PM Author: boyish carnelian business firm The headaches and risks mostly disappear when you are both the LL and tenant (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004407) |
|
Date: October 20th, 2019 6:06 PM Author: cobalt diverse stage (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004521) |
|
Date: October 20th, 2019 3:55 PM Author: Vibrant ticket booth Because commercial real estate is capital intensive and most small to medium businesses don't have the cash to get into it. Owning, managing and maintaining commercial properties is also outside their area of expertise . (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004045) |
|
Date: October 20th, 2019 3:58 PM Author: Tantric stirring address philosopher-king My buddy does accounting for a big company who just moved into a brand new gorgeous building for their headquarters. He told me that for the amount of rent they are paying, they could have paid for the cost of the building in three years. Unreal (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004059) |
|
Date: October 20th, 2019 4:06 PM Author: pea-brained chestnut native Truly Not Real (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004110) |
|
Date: October 20th, 2019 4:09 PM Author: Vibrant ticket booth CR. His buddy probably can't do math. I look at leases and building construction budgets all the time. Developers aren't making money hand over fist like his friend suggests. There's also a ton of risk involved. Just do risk your entire business to save a few shekels. (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004124) |
|
Date: October 20th, 2019 4:05 PM Author: pea-brained chestnut native Why would they own?
Cost of capital too high to be investing in real estate |
|
Date: October 20th, 2019 4:07 PM Author: cobalt diverse stage This is dumbass MBA think. Once the building is paid off you have lower margins and won't be fucked over by terms of a lease changing etc (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004115) |
|
Date: October 20th, 2019 4:08 PM Author: Vigorous church just run (and somehow get financing for) two businesses at once! (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004122) |
|
Date: October 20th, 2019 4:15 PM Author: pea-brained chestnut native i Think you meant higher margins. that aside, just bc it’s a positive IRR doesn’t mean it’s a good investment (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004158) |
|
Date: October 20th, 2019 10:02 PM Author: Poppy hairless institution dingle berry Cost of capital is low these days (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39005429) |
|
Date: October 20th, 2019 4:53 PM Author: boyish carnelian business firm Because they only think short term and it’s better on paper short term. (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004309) |
|
Date: October 20th, 2019 5:02 PM Author: light nowag this is the real answer (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004325) |
|
Date: October 20th, 2019 5:25 PM Author: boyish carnelian business firm (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004400) |
|
Date: October 20th, 2019 6:06 PM Author: cobalt diverse stage (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004523) |
|
Date: October 20th, 2019 5:27 PM Author: carmine massive market A fool and his money are $oon parted (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004416) |
|
Date: October 20th, 2019 6:08 PM Author: idiotic milky menage sweet tailpipe Civilization begets specialization. When you drift away from your "core competency" into clueless side-hustles, you are probably going to lose your shirt. (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39004528) |
|
Date: October 20th, 2019 6:32 PM Author: boyish carnelian business firm Clueless side hustle like owning property?
How exactly do you think a company would “lose their shirt”? I don’t think even the most dedicated MBA student would argue that.
All the hypothetical losses from owning land are in opportunity costs. |
|
Date: October 20th, 2019 9:04 PM Author: Chocolate hairy legs dilemma (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39005151) |
|
Date: October 20th, 2019 9:02 PM Author: pea-brained chestnut native Truly stupid schtick (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39005138) |
|
Date: October 20th, 2019 9:47 PM Author: cobalt diverse stage (Biz school idiot) (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39005345) |
|
Date: January 29th, 2026 1:37 PM Author: goy orbison (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#49630514) |
|
Date: October 20th, 2019 9:59 PM Author: Charismatic indigo dragon What is the cap rate on CRE? 8%? I would assume if someone is running a business they expect a lot higher return than that, even on a leveraged basis.
I will say that it makes sense to own the real-estate over the long run, not because of strictly financial considerations, but rather because of the stability it brings. |
|
Date: October 20th, 2019 10:08 PM Author: lascivious demanding school cafeteria It really depends on the situation but for a lot of businesses it makes sense to own the real estate and it’s short term thinking to sell it.
However - doing something like a sale leaseback can come into handy if you know your gonna reduce your footprint in a few years for whatever reasons like redundancy or merger or facility consolidation, where you access capital up front that can be redeployed into higher RoI situations. |
|
Date: October 20th, 2019 10:23 PM Author: judgmental white hissy fit genital piercing (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#39005548) |
|
Date: January 29th, 2026 1:38 PM Author: goy orbison Update: Basically every "hip" brewpub in every fag city is going out of business cause their rent went up while profits did not, if they owned their buildings they could downscale and weather the storm until zoomers learn to enjoy the taste of cold beer (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#49630524) |
|
Date: January 29th, 2026 1:41 PM Author: UhOh just do add a couple million to your start up costs (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#49630535) |
|
Date: January 29th, 2026 1:48 PM Author: goy orbison Real estate was cheap back then (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#49630588) |
|
Date: January 29th, 2026 2:08 PM Author: ,..,,,,,,....,,,..., Do you think guys with a business plan that is “make some beer and sell it - guess we’ll also have cool hats and t-shirts and get a dude to make wings or whatever” also have the capital and knowledge to make a smart multi-million dollar real estate investment? Which incidentally if they get it wrong will bankrupt them, whereas if they get fucked at lease renewal they can move their operation to a shittier neighborhood or get a new job? (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#49630681) |
|
Date: January 29th, 2026 2:12 PM Author: goy orbison Mortgage is the same as a lease you just own it at the end (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#49630693) |
|
Date: January 29th, 2026 2:29 PM Author: ,..,,,,,,....,,,..., Mortgage requires equity and is a 30-year commitment that you can’t easily walk away from. Nobody is giving a good mortgage for a startup business with no equity and no personal guarantee. Lease does not require equity (in many cases landlord will give you a free period or pay for improvements so it is effectively negative equity) and if shit goes sidewise you can just not renew, pay a termination fee if pre-agreed, or negotiate a favorable termination on the grounds “you don’t want to pay lawyers to sue the owner of a failed brewpub.” Obviously the calc is different if you are a big enterprise with wealthy owners who have other assets, but we’re talking here about people who can’t handle a rent increase so that seems not to be the case. (http://www.autoadmit.com/thread.php?thread_id=4367230&forum_id=2most#49630777) |