If you currently own a commercial real estate OKC property for your business, you might want to consider a sale leaseback in Oklahoma. A sale leaseback OKC is an effective way to increase cash flow without having to move the location of your business. Before deciding if a sale leaseback is right for you, take a look at the advantages and disadvantages that come with the process.
Sale Leaseback OKC Advantages
Whether or not a sale leaseback is an advantage or disadvantage depends on the circumstances of your business. Here are a few reasons they can be an advantage.
- Liquidity: If your business is ready to grow and you need liquidity, a sale leaseback may be precisely what you need. With a sale leaseback, you can quickly receive the equity from selling your commercial real estate.
- Location and Expenses: With a sale leaseback in Oklahoma, the property you sell is then leased back to you. Your business remains where it is. Additionally, the operating expenses stay the same because most leases are triple-net, giving the tenant property control.
- Debt to Equity Ratio: A sale leaseback OKC can be more cost-effective than a loan because a loan comes with typical debt financing fees. Additionally, the working capital that you gain from a sale leaseback improves your debt-equity ratio.
- Market Conditions: If it happens to be a seller’s market, you might want to consider a sale leaseback to capitalize on your investment without losing the location of your business.
Disadvantages of a Sale Leaseback in Oklahoma
If you are thinking of selling your property, take the time to contemplate if the advantages outweigh the disadvantages. Below are some drawbacks to consider. Fortunately, an experienced broker can help you navigate any pitfalls.
- Taxes: Selling your property brings up tax liabilities, such as capital gains tax. A 1031 Exchange may help, but you should always consult your broker.
- Depreciation: There is a tax advantage to owning your property, depreciation. When you sell the property, depreciation benefits will no longer apply.
- Appreciation: Of course, one of the reasons to purchase commercial real estate OKC is the potential for appreciation in value. Selling means that you will lose any future appreciation, which is why you should try to avoid selling when the market is low.
If you are not careful about entering into your lease, you could risk losing control of the property. Make sure that your broker negotiates a standard triple-net lease that guarantees you are able to keep control over the property.
Making a Decision
As you can see, there are different variables to consider before entering a sale leaseback agreement. If you have any questions about selling your property or negotiating a sale leaseback, we would be happy to help. At Horizon Commercial Real Estate, we walk you through each step of the sale leaseback process, ensuring that the final agreement benefits you and your company. Please contact us today to discover more about sale leasebacks or any of our other commercial real estate services.