|
|
|
|
Home / Business / Financing
Real Estate Investing Acquisition With A Lease Or Purchase Option
By:David Gass
Acquiring equipment on a lease or purchase in the real estate industry can be a significant investment decision. Therefore, one must do all the necessary comparative analysis pertaining to costs and various other factors before taking the final step. It is important to know that the purchase or lease decisions are case specific and difficult to generalize. A careful need based study of the company is very important.
Factors To Be Considered
It is important for real estate investors to determine the time, for which the equipment that they are planning to lease or purchase, is likely to be used. One must also compare the total rental payments together with the interest component and the net purchase value of the particular equipment. If the cumulative lease amount exceeds the net purchase prices, it makes no sense to lease the equipment.
One must also estimate various costs related to transportation and installation of the equipment. Routine repair and maintenance of such equipment is necessary to keep it in good working condition. Hence, a real estate investor must check with the service provider to see whether the provider has provisions for routine checkups. Most importantly, check whether the lender or seller offers purchase options or an extension of the lease.
Choose The Right Mode Of Acquiring The Equipment
There are two ways of acquiring equipment. You can either purchase it or lease it.
Purchasing equipment is wise, only in a scenario where the equipment is to be used over the long-term for a number of real estate developments. The rentals are lower compared with the net purchase value of the equipment.
Leasing equipment is a great option for those who want to gain expertise in specific areas with less time and cost. It eliminates large cash outlays and allows companies to use their funds for other investment purposes. With the perspective that - it is not the ownership of the equipment but its use that generates revenues, leasing seems attractive. Leasing is advisable if the equipment is to be used for the development of a few real estate projects over a small to medium term. One must avoid leasing equipment for a long-term unless the package offers very attractive features. If you are considering a lease, prefer one that has an option of purchase.
Prefer A Lease Agreement With An Option Of Purchase
Such a lease agreement specifies that the owner will rent out his equipment to the customer for monthly rental for a stipulated time with a predetermined buy out. The customer is responsible for insurance, maintenance, and all other costs of ownership. At the end of the lease period, the user has the option of purchasing the equipment, re-leasing it, or simply returning it to the owner.
Article Source: http://www.dailynewarticles.com
David Gass is President of Business Credit Services, Inc. His company publishes a free weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com.
More Articles from Financing Category:
Discovering The Advanta Platinum BusinessCard with Rewards
The United Mileage Plus Platinum Business Card - How To Gain Points for Business Travel
The Platinum Business FreedomPass Credit Card from OPEN - Instant Access To Massive Credit
No Fax Cash Advance
Getting a Business Line of Credit from OPEN
Real Estate Economics at a Glance
The Importance Of Transparency In Financial Reporting
Real Estate Investing Acquisition With A Lease Or Purchase Option
How To Purchase Real Estate Through An IRA
A Successful Business Financial Projection Can Be the Key to Securing Financing
A Document Management System Can Help Your Business
Business Line of Credit – The Good and the Bad News
Tips on Forex Currency Trading
Going Public via Initial or Direct Public Offering: The Role of the Stock Exchange
Real Estate Marketing; The Profitability Of Past Clients
|
|
