Start your business and property decision with Albuquerque Business Brokers Edge and bring the questions below to the people helping you prepare.
Put realistic rent into the company numbers
A company operating in an owner’s building still uses space a buyer must pay for. A rent arrangement below market can make operating profit appear stronger than a new owner will experience.
Have qualified advisors review the lease and market rent assumptions. Do not transfer income between the property and operating company simply to make one valuation look larger.
Keep repairs, property expenses and operating expenses clearly allocated. A buyer should understand what the company needs to pay under the proposed arrangement.
Compare the possible ownership paths
You may consider selling both assets, retaining the building and leasing it, or finding separate buyers. Each option creates different funding and transition questions.
A buyer who can finance the business may not want to buy the building. A property decision should take that practical limit into account without assuming a lease is always better.
Discuss the tax and transition effects
Business value and property value use different evidence and methods. A valuation referral for the company does not replace a separate real estate assessment.
Ask your accountant and attorney to compare the consequences before you commit. Your desired income after the sale, remaining obligations and willingness to be a landlord all belong in the decision.