Reston, VA-Net lease investors interested only in freestanding retail properties are ignoring a very lucrative investment opportunity–net lease retail condos. These properties offer many of the same benefits as traditional net lease investments. Moreover, they allow net lease investors (or net lease brokers) to put money into areas that traditionally exceeded most net lease investor budgets: dense urban areas with strong foot traffic.

“In general, retail condos are very well located and have very good demographics and demand drivers,” says Harmar Thompson, senior vice president of Lowe Enterprises Real Estate Group. The Los Angeles-based developer recently sold the retail portion of its CityVista project to Columbia, SC-based Edens & Avant.

Located in Washington, DC’s Mount Vernon Triangle neighborhood, the mixed-use project includes 441 condominiums, 244 rental apartments and roughly 116,000 square feet of retail. The project is structured with a condo regime, Thompson says, which allows Lowe Enterprises to sell pieces of the project to monetize other components. A 55,000-square-foot Safeway anchors CityVista and was part of the retail condo that Edens & Avant acquired.

Like traditional net lease investments, net lease retail condos are leased to tenants that have committed to a long-term lease, usually longer than 10 years, and as long as 25 years with increasing rent over the lease term. The tenant is responsible for paying rent plus some or all of the operating expenses of the building such as taxes, insurance premiums, repairs and utilities.

Retaining Value

Most retail condos are located in central business districts, though retail condos can also be found in suburban locations. Cities such as New York, Chicago, Boston, San Francisco and Washington, DC have the largest concentrations of retail condos, but smaller cities like Seattle, Denver and Charlotte, NC also have retail condos.

Over the past five years, more than $20 billion worth of retail condos have changed hands in the United States–and that’s just in urban areas, according to Real Capital Analytics, a New York City-based research firm. Though the total includes only deals larger than $5 million, a significant portion of retail condos sales come in well below the $5-million mark, making retail condos accessible to a wide range of investors.

Real estate assets in urban areas tend to retain their value better than assets in suburban locations, making urban retail even more attractive to net lease investors. However, most net lease investors have been priced out of urban markets because the only available investments were entire buildings with price tags in the tens of millions, if not hundreds of millions.

The vast majority of retail condos are part of mixed-use buildings. They typically occupy the ground floor of vertical mixed-use projects with office, hotel or residential above the retail, and sometimes all three. They can also be found in town center projects in suburban areas. Retail condos range in size, from as small as 500 square feet to 50,000 square feet or more.

The difference between a typical mixed-use project and one that includes retail condos is the ownership structure. Developers choosing to go the retail condo route end up implementing a condo regime on their projects, which basically carves up the different uses in the project into as many pieces the developers desire. Retail condos can be sold to an investor or buyer who plans to occupy the space. The retailers occupying retail condos aren’t just mom-and-pop retailers either; large national retailers also sign leases in buildings that have been structured as retail condos.

“Retail condos offer bite-sized pieces for net lease investors,” Thompson points out, adding that investors are increasingly willing to pay a premium for retail condos because of their urban locations and built-in foot traffic from nearby office tenants or residents.

This willingness to pay a premium is a marked change from just a few years ago. “We find that people are much more accepting of condo interests than they used to be,” Thompson says. “In the past, investors paid less for condo interests because they were uncomfortable with the fact that they would never have full control of the entire property. But, enough developers have done retail condos that lenders and investors are comfortable with the product.”

That doesn’t mean net lease retail condos still don’t have their quirks. Janis Schiff, a partner in the Washington, DC office of Holland & Knight and head of the firm’s real estate group warns that investors must accept they own only a piece of the building and the entire project may have issues or expenses in addition to the retail condo. Also, investors have to deal with condo associations, an added complication that many net lease investors actively avoid, Schiff says.

Nonetheless, net lease retail condos offer plenty of benefits. “For net lease investors who don’t want to own a property in the middle of nowhere and prefer a sure thing in terms of traffic and density, retail condos are an option,” Schiff notes.

Monetizing Pieces

Retail condos are not only lucrative for investors, but for developers as well. In fact, more and more developers and joint ventures are structuring their projects to include retail condos. “Condo regimes are a way to harvest value in complicated mixed-use projects,” Thompson says, adding that Lowe Enterprises sold the CityVista retail condo before it was able to sell out its residential condos. “We had the option to monetize components to pay off the loan.”

In traditional retail developments, developers can subdivide their projects and sell off parcels to multiple retailers, and the proceeds from the land sales provide equity for the entire project. Historically, developers didn’t have the ability to monetize specific pieces of mixed-use projects because it was nearly impossible to sell off parcels of a mixed-use development, especially a vertical development. Developers were forced to follow an “all or nothing” strategy–either leasing everything or selling everything.

But condo regimes make it possible for developers to divide mixed-use projects in various ways. Schiff contends that condo regimes are one of the best ways to separate value and reduce risk because developers can own each component of their projects separately. “Condo regimes give developers more flexibility,” she concludes.

Beyond flexibility, it’s not uncommon for some developers to actually make more money by selling parts of their projects rather than selling the projects whole, Thompson notes. This is especially the case for mixed-use projects in urban areas with national tenants committed to long-term net leases.

“We see mixed-use properties as the future, so it makes sense for a net lease investor to bet big on those types of projects,” Thompson says.

Jonathan Hipp is president and chief executive officer of Reston, VA-based Calkain Cos. and a member of NET LEASE forum’s editorial advisory board. The company’s website can be found at calkain.com



Sell and Rent Back

The equipments and the technologies used in business can be quite expensive and requires a lot of capital to be invested. Leasing is a convenient way to acquire the equipment your business needs-without all the hassles. Leasing business equipment and tools preserves capital and is considered a better option than bank loans. Also in bank loans you are required to deposit a substantial amount of your capital as down payment and usually require extensive documentation and often require collateral.

Business equipment leasing is a loan which is taken for buying business equipments. Business Equipment leasing can include leasing of office equipments, computers, printing equipments, software and much more. Leasing is especially attractive if your business relies upon cutting-edge technology such as the latest computers, communications devices or other equipment. A series of short-term leases will cost you less than buying new equipment every year or two. Signing terms on a lease can allow even small companies to deploy expensive systems very quickly and without tying up a dangerous amount of cash in said systems.

With Syndicated Leasing (Equipment Leasing Services California) ability to lease just about any type of equipment, leasing can help you conserve cash, preserve lines of credit and keep your business on the leading edge. After visiting http://www.syndicatedleasing.com/ you’ll get to know how a leasing company like syndicated leasing can provide you with the greatest leverage for all your equipment leasing needs. Our business equipment leasing and financing options can provide you with an equipment financing solution. Syndicated leasing provides business equipment leasing, heavy equipment leasing, capital equipment leasing, transportation equipment leasing and heavy construction equipment leasing to small and large business firms. Leasing business equipment and tools preserves capital and provides flexibility but may cost you more in the long run.

We encourage you to visit http://www.syndicatedleasing.com, discover a range of equipment leasing services and gain a better understanding of the overall leasing process.



Sell and Rent Back

 

If you need a vehicle for your business but have no sufficient funds to purchase outright a new van or pickup, your best option is to lease a van from companies in UK that offer van leasing services. Van leasing is backed up by financial institutions that initially allow you more flexibility in paying for the vehicle that you need. Here you can have an initial deposit based on your paying capacity and then you’ll be able to pay regularly for the duration of your use until it reached maturity, in which case you have a choice to buy it outright or return it to the company. Although there are policies and rules of companies in van leasing that is suitable both for the customers and the profitability of the company, there are just many arrangements in van leasing that suits your current financial capacity. With van leasing, it would not be hard for you to use a van or pick up for your business since it is usually flexible to your needs.

 

Van leasing companies had wide array of vans and pickup of different models and brands. They are usually intended for commercial use although there are arrangements for personal use. The commercial usage of van leasing requires financial potential of the business and the time of maturity. Usually the person who wants to lease van is not only concern with the fact that they have no sufficient fund for outright purchase. They are mostly concern on the depreciation of the vehicle and its possibility that it can be returned anytime they want to. Nevertheless, van leasing is more appropriate for businesses whose nature requires frequent turnover of vehicles.

 

You have to take note that in van leasing the vehicles are used vans. However, the company that offers such services ensures that the vehicles are useable. They are usually refurbished and are remodeled by highly trained automotive engineers.

To ensure that you get satisfying services from van leasing with used vans, make sure that you know the background of the vehicle that you are going to lease. This way, you would know how used up the vehicle was and evaluate if it still has driving potential that suits your plan in using it. With van leasing companies you have choices of vehicles to lease so you can always choose one over the other until you find one that suits your need. To ensure maximum usage of used vans, test drive the vehicle before finally accepting the chosen van. This way, you will be able to know the condition of the van. After determining the condition of the car and matching it with your commercial use, make arrangement with the leasing company that best suits your need as well. Be sure that these agreements are carefully written in the contract.

 

One of the companies that offer van leasing services is UK Vehicle Contracts. They offer wide array of used vans from well known brands like Mitsubishi, Ford, Toyota, Mercedes, and many other brands. One good thing about UK Vehicle Contracts is that they cater to all areas in the UK. Their 12 years of experience in van leasing makes them an expert in dealing with clients that need vehicles for commercial use. You can count on their expertise in dealing with your current need for commercial vehicle. You can readily reach UK Vehicle Contracts through their online site and view the available used vans for lease.

 



Sell and Rent Back

Vans can be a popular choice for a vehicle for those that have a large or expanding family or those that have a lot of items to cart around with them on a regular basis; it is especially popular with companies that want a set monthly expense, as apposed to those that need to part with large one off payments. Leasing a van can be a very good option for those that feel they are in need of a van, for personal or commercial use. Leasing a van involves the individual or company renting the van for a defined period of time for a set monthly payment every month until the lease expires. There are many advantages to leasing a van and just a few disadvantages that should be considered before one decides on van leasing.

One of the biggest advantages in van leasing is that there is no large payment due at the beginning of the leasing period. There is a deposit due at the beginning of the lease period but this payment is generally quite small and totals only about one, two or three of the monthly payments in the lease period. The monthly payments involved in van leasing are also usually quite lower than those when purchasing a van. Not only does this save the individual or company leasing the van quite a bit of money but it can also make leasing a great opportunity for driving the van of the individual’s choice for the short-term.

Van leasing also allows for the individual to give up a van after it has been driven for a couple of years. At that time, the individual may consider the van to be outdated or they may simply not want to stay with a van that has been run down with regular use. Once the leasing period is up, the individual can simply return the van to the leasing company and enter into a new lease for a new van.

With all of these advantages to van leasing, it is important to note that there are some disadvantages. The biggest one of those is that one does not actually own the van at any time. Even during the period that the individual is driving the van it is not theirs. It always remains the property of the leasing company.

Another disadvantage to van leasing is that it can be difficult to calculate the annual mileage and other charges. A leased van has a set number of miles that can be accumulated on it. If the number of miles exceeds this number, the charges can be quite costly. To avoid this, it is important to accurately calculate the mileage that one does in a year. Miscalculating this can lead to heavy charges that the individual or company leasing the van was not expecting. Other charges that may be included in a lease is that the individual will have to pay for any damages to the vehicle. Although this would probably be the case should the person own the van outright, there may be some minor damages that the individual would not bother in fixing if the van were their own property?

Unlike a loan, it can still cost the person leasing the van quite a bit even if they want to settle the lease early. Unlike a vehicle loan, settling early with a van lease usually means that the individual still needs to pay the interest on the remaining months.

Van leasing usually has more advantages than disadvantages. However, one must do their research and make sure that this is the right option for them before entering into an agreement.



Repossession

One way to get a good deal on a car lease is to take over lease payments from someone else. Many people end up entering into an agreement with a finance company for a car lease. In some cases, they discover that they are in over their heads and have a tough time making the car lease payments. Because they are told that if they turn over their lease prior to the term they are liable for a penalty, many people end up defaulting on their car lease and ruining their credit. This is because they do not know that they can get someone else to take over lease payments. 

 

If you want to get someone to take over lease payments from you, you can use a leasing agency that participates in car lease swaps, turn over leasing and even allowing people to lease cars for a short term. Many people do not know that such agencies even exist and that this help is available to them when it comes to their car lease. They never think that they can actually get someone else to take over lease payments from them. 

 

This is the best option when it comes to having a car lease that you cannot afford or no longer want. If you allow the lease company to repossess the car because you default on your lease payments, you will be destroying your credit. A repossession of a car stays on your credit for at least 7 years and is a black mark on your credit score. You are better off to avoid this at all costs.  The best way to do so is to allow someone else to take over lease payments from you. This way, you can get rid of the lease obligation without it negatively impacting your credit. 

 

A lease assumption is often the right option for someone who is having a hard time paying their monthly car lease. Not only does it help someone out of a financial bind, but it can also help someone who is looking to take over lease payments from someone else because they want a certain type of car, a low payment or a shorter term lease. 

 

There are options when it comes to car leasing. Many people do not understand the options that are open to them when it comes to leasing a car.  They think that they have no choice but to go to the car dealer and take the deal that is offered. This is not true. Thanks to leasing companies that offer such services as lease swapping, you can pick up a short lease or even get someone to take over lease payments that you cannot afford when you use these car lease services. 

 

Leasing services will give you the option to choose the car that you want, for the payments that you feel comfortable with and have many creative ways that you can drive a car that you like for the monthly payment that you can afford. If you are having a hard time making your car lease payment, look to a leasing service that will take over lease payments for you.   

 

  

  



Sell and Rent Back

Did you know that you can negotiate the value of the vehicle, capitalized cost reduction, length of the lease, mileage allowance, and options and equipment when you’re leasing a car? Here’s all you need to know to get a great deal.

• The agreed-upon value of the vehicle — just as you can negotiate the price of a vehicle when you buy it, you can negotiate the value of a vehicle when you lease it. The agreed-upon value of the vehicle is the primary component of the gross capitalized cost, so the lower this value is, the lower your monthly payments will be.

Manufacturers, dealerships, or lessors sometimes offer special incentives that reduce the agreed-upon value of the vehicle. If this is the case, you may not have much room to negotiate.

In any price negotiation, it helps to know the lessor’s cost for the vehicle. You can get dealership cost information from a variety of sources on the Internet and from publications that are available in most public libraries. Use this information to help you negotiate the agreed-upon value of the vehicle.

• The capitalized cost reduction (cap cost reduction) — the capitalized cost reduction for a lease is like a down payment when buying a car. The more you pay to reduce the capitalized cost, the lower your monthly payments will be. The trade-off is that you have to pay the cap cost reduction up front, and you may not have the lump sum amount or you may want to do other things with that money.

Ask how different cap cost reductions will affect your monthly payment (for example, if you pay $1,000 instead of $3,500, what would your payments be?). Most lessors restrict the maximum cap cost reduction you may make. For example, the maximum may be 20% of the MSRP or 20% of the value of the vehicle.

As an alternative to paying a higher cap cost reduction, you might be able to reduce your rent charge, and thereby lower your overall costs, by paying a higher security deposit

You may also want to consider a single-payment lease as an alternative to paying a higher cap cost reduction, if it will reduce your costs. Some lease offers are based on a specific cap cost reduction. If you see a lease offer that is appealing to you, be sure to check the cap cost reduction and ask how the other lease terms and conditions would change if you paid more or less up front.

• The length of the lease — most leases are for 24, 36, 48 or 60 months (2-5 years). However, you may negotiate a lease for just about any period in between. Keep in mind, though, that not all lessors offer all terms — for example, some offer only 24- or 36-month leases. Occasionally you may find leases with terms shorter than 24 months or longer than 60 months.

Sometimes you may find a lease for a period other than a full year–for example, 39 months instead of 36 months. Such a lease may be a special offer. For example, the lessors may use the same residual value for the longer term as for the shorter term, thereby spreading the depreciation over more months and reducing the monthly payments.

When evaluating such a lease offer, be sure to compare all the other lease terms in addition to monthly payments. Unless the lessor is making a special offer, such as in the example, negotiating a different term for your lease will change the residual value in the monthly payment calculation.

The longer the term of your lease, the lower the residual value will be (because the vehicle will be older when you return it). Thus, you will pay more in total depreciation with a longer-term lease. Try to match the length of the lease to your needs and preferences. Negotiating a longer lease will generally lead to a lower monthly payment, but deciding to end a longer lease early could be costly. In a closed-end lease, the opportunity to avoid unexpected depreciation and walk away occurs only when you have completed the full term of the lease and paid any amounts owed.

• The mileage allowance — common annual mileage allowances in leases are 10,000 miles, 12,000 miles, or 15,000 miles, but you can negotiate other limits. Many lessees drive more than 14,000 miles a year. Try to match the miles you will be driving to the mileage allowance in the lease.

If you think you’re going to be driving more miles than the lease allows, it’s generally better to negotiate a higher mileage allowance in the lease than to pay for the extra miles at the end of the lease. On the other hand, if you think you’ll be driving fewer miles, you may be able to save money by choosing a lower-mileage-allowance lease.

A lower-mileage lease will generally specify a higher residual value for the vehicle because a vehicle with fewer miles is worth more and is expected to have less wear. This higher residual value means that you will pay less for depreciation and your monthly payments will be lower. In contrast, a higher-mileage lease will generally specify a lower residual value for the vehicle because a vehicle with more miles on it when it’s turned in is worth less than a lower-mileage vehicle.

Therefore, you’ll pay more for depreciation during the term of the lease. And if you don’t use those miles, you may not be entitled to a refund at the end of the lease. If the lessor has a refund policy, it should be stated in the lease.

• Dealership- and consumer-installed options and equipment — just as when you buy a car, you can choose the features you want and add accessories to a leased vehicle. You may want to upgrade the sound system, install a leather interior, or add a sunroof to the vehicle.

It may be preferable to have those items included in the lease rather than added after you lease the vehicle because if the lessor considers the equipment, for resale purposes, as adding value, the equipment will increase the residual value of the vehicle.

You would then pay only for the expected amount of depreciation of the equipment during the lease, not for the full cost of the equipment. However, lessors often have different policies for determining what is value-adding equipment.

Adding an extra feature may increase your personal enjoyment of the vehicle, but it may not appreciably increase the vehicle’s resale value at lease-end. Ask the lessor about its policy on any equipment you want to add.

Also, in some cases, lessors will not let you add something if removing it may damage the vehicle or reduce its value. For example, you may not be able to add a trailer hitch, a luggage rack, or a mount for a car phone unless you are willing to leave it on the vehicle.

Be prepared to negotiate the price for any of these features and accessories. It helps to know the lessor’s costs for these accessories and features.

You can get dealership cost information from a variety of sources on the Internet and from publications that are available in most public libraries. Use this information to help you negotiate.

You may also be asked if you want to sign up for a service or maintenance contract or for rust-proofing, fabric protection, undercoating, and so forth. These services are optional, and their prices can be negotiated.

You’ll need excellent negotiating skills when you lease a car. By using the above tips, you’ll soon be leasing your vehicle at very favorable terms.



Repossession

This is possible if the plot of land is not sold to another new owner or the land owner stay alive long enough to renew your lease terms. Other than this, it is fallacious to think that you can lease a plot of land for 90 years under Thai civil laws.

Under Thai civil laws, a long term lease of a plot of land can be up to a maximum lease period of 30 years. The law also provides for leasing land for the life period of the land owner or the lessee. A 30 years lease of land is a long term lease and has to be made in writing, signed by the lessor and lessee and registered at the district Land Office in order to be legally enforceable. In Thailand any lease of immovable property for more than 3 years must be registered. The registration of the 30 years lease period at the district Land Office means that you, the lessee, have the right to use or benefit from the plot of land for the registered 30 years lease period. No other third party would be able to use or receive benefits from the land for the 30 years. If the land had been bought up by a new owner during the 30 years, this new owner is binding to your 30 years registered lease i.e. allow you to lease the land for the registered lease period. In legal language, you have a real right over the land for the registered 30 years.

Any promises to renew the 30 years lease term for another 2 x 30 lease terms are just promises agreed upon between the land owner and you. An example of such personal promises can be a stipulation in the lease of land contract: “the lessor agrees to renew the lease for another two 30 years lease terms”. Besides the lessor and yourself, no other person is contractually binding to these renewal promises. A third person is not a party to these promise agreements. Therefore, when the plot of land is sold to a new owner, the new owner is not binding to the promise to renew the lease at the end of the 30 years registered lease.

If the land owner dies, the promise dies too, whoever is the land owner at the end of the 30 years is not obligated to renew the lease as well.

Tip

One of the recourse would be to lease the plot of land for only 30 years. Register the written and signed lease of land contract at the Land Office. Alternatively, you may want to consider purchasing a condominium unit(s).

** Written by David Tan. David is a Lecturer of Business Law at Asian University and author of the book "A Primer of Thai Business Law", available online at www.chulabook.com . In Bangkok, the book is available at all Kinokuniya and Asiabooks bookstores. Any questions or comments to David should be sent to blas.inter@yahoo.com

 



Quick Property Sale

Equipment Leasing is admittedly big business that can bring in good profits for your company, but to accomplish that, you need to market your Equipment Leasing business properly. Here are some ideas that should help you pull in more customers who need Equipment Leasing to be able to operate on a daily basis.

Equipment Leasing marketing will work, first of all, if you have the right business plan in place. This is the most crucial part of the Equipment Leasing business. Without the right business plan to use, your Equipment Leasing business and your Equipment Leasing marketing effort will both founder and fail. So do create the right business plan to make your business progress over years.

You will then need to examine the history of your Equipment Leasing company the right way by starting at its beginnings and analyzing how it was able to survive up to its present state and age without going under. You have to tag the events and trends that influenced the Equipment Leasing industry at various periods in time, then look at the present condition of your Equipment Leasing business to see what factors exist now and what events seem to impact on the company. This will help as you refine your Equipment Leasing business plan and Equipment Leasing marketing plan.

Now you have to analyze how much of a budget you have for marketing your Equipment Leasing company the right way and to the right customers. Of course, you are trying to figure out what kind of return on investment this Equipment Leasing marketing plan can give you in the end – because when all is said and done, this is a business you are running and you have to stay profitable. And to analyze the return on investment properly, you may have to factor in various aspects of an Equipment Leasing company’s overhead (such as personnel compensation, lights, water, and maintenance of the heavy equipment you are leasing out.)

So you have enough funds to go about marketing your Equipment Leasing company – but how do you start marketing your Equipment Leasing company then?

First off, you need a market analysis that is geared for your Equipment Leasing company and the business itself. You need to set definite business goals for your Equipment Leasing marketing effort to bear fruit. Business goals help your organization and marketing effort stay focused and helps you avoid going everywhere and anywhere in your logic. What marketing strategies would be perfect then for your Equipment Leasing company so that you reach those customers who are really interested in heavy equipment to meet their business needs. This may mean focusing on a niche market so that you can conserve time, energy, and resources that would otherwise be scattered everywhere and anywhere in your frantic attempts to get customers. And of course, your Equipment Leasing company has to be in the right place at the right time to succeed, and that holds true for your Equipment Leasing marketing effort too. If you can find the trends in the industry that dictate the pace of sales, and who are the important people who can make those trends work for you, then you have won half the battle.



Sell and Rent Back

There are three ways that you can buy a car. You can pay cash, you can finance the car or you can get a car lease. An auto lease is often preferred because you will have a smaller monthly car payment. There are some things that you need to know when you get an auto lease. 

 

You still have to maintain the car when you have a car lease. An auto lease is not like having a rental car. You treat the car as if it was your own and make any necessary repairs. You should keep the car in good condition because when you are turning the car back to the lease company, they will inspect it.  Any damage will have to be paid for by you out of pocket. So you do have to maintain the car. 

 

Another reason that you may want to use an auto lease is because it can be a tax incentive. If you use your car for your business, many times it is better to get a car lease instead of buying the car. You should talk to your accountant whether or not it is better to get a car lease or if you should buy the car. 

 

A great deal of the reason that people want to use an auto lease is because of the cost. The cost of leasing a car is much less each month than it is to buy the car. But at the end of the lease term, you have to turn the car in. The longer the car lease term; the lower the payment. But the more you are committed to the car lease term. If you try to get out of an auto lease early, you will have to pay a fine. 

 

You can get a car lease from a financing company, usually when you purchase the car. There are other options, however, when it comes to an auto lease. These include using a lease company that can help you get a short term auto lease as well as even give you the choice to swap your current car lease for another lease. 

 

If you have a car lease, you still have to carry car insurance on the car. Many people are confused when they get a car lease and think that they can behave in the same way as they would if they rented a car with an auto lease.  This is not the case. You are, effectively, buying the car, but have to turn it in instead of keeping it once the lease term is expired. At that time, you do have the option of buying the car from the finance company. 

 

If you want to lease a car, you have choices. You do not have to feel that the only choice is the financing company where you buy the car. You can find a car lease company that will offer you choices such as lease swapping, short term car leases as well as the chance to give up your existing auto lease and have it assumed by someone else.  

 



Repossession

Equipment Leasing Overview

Equipment is a fundamental part of any business, whether small or large. It is with equipment that businesses render the services that they do. The quality and quantity of equipment a company uses, together with how the company deploys such equipment makes the difference between success and failure in a highly competitive economy.

When it comes to the hardware of a business, companies often prefer to go the extra mile to purchase equipment that will give them an edge in whatever industry they operate. While this quest for better machinery is laudable the methods in which it is obtained are not.

Purchasing equipment off manufacturers’ shelves is a decision most companies choose to take and they do so quite wrongly. In a business, the value of an asset is in its use and the value of that same asset depreciates with its use as well. Equipment is an asset, which satisfies this truth only too well, you buy some expensive piece of machinery, which looks good on your balance sheet, and in the next 4 years its value depreciates to nothing.

Equipment Leasing is the correct option as opposed to buying when your company needs equipment. Equipment is a tool that must be used to its maximum capacity to provide the service your business offers. In this light company should aim to save themselves the wanton waste of money that goes with purchasing equipment and should explore the benefits that come with leasing equipment instead.

Leasing equipment is not an aim at cutting corners or reducing the needed service quality delivered by a business. Equipment leasing is a proactive means of increasing your company’s cash flow that would otherwise be tied down if you considered the purchasing option. This cash flow could impact on other areas of your company’s business and improve your company’s balance sheet in the profit columns. Cash should not be tied down in a quickly depreciating asset such as bought equipment.

Benefits of Leasing

If you’re considering leasing equipment for your company rather than buying, you’re not alone. Statistics have it that over 80 percent of U.S based businesses lease their company equipment as opposed to buying, so you can remain rest assured that it’s a wise decision. To support this fact we offer you some of the financial benefits of commercial equipment leasing.

Financial Benefits of Leasing

These financial benefits of leasing cover how leasing helps your business improve its financing either by saving money or making more money for your company. The list is hardly exhaustive but the points examined here are the strongest and reflect the areas of finance that are most important to a business.

Increased Working Capital – With equipment leasing you save yourself the cost of buying the equipment outright. The money you save from purchasing the equipment can be deployed into other areas of the business. Obtaining a business equipment lease also preserves the line of credit you have from your bank as the financing you use to obtain the leased equipment is much lesser outright purchase. By saving this money you can improve your business edge with the right equipment, turn a better profit and not only retain your existing credit line with your bank but improve it as well.

Improved Balance Sheet – In business the balance sheet is an all too important area of determining performance, not only to your shareholders but also to people who provide major financing such as banks and prospective investors. This improvement comes in various areas: first of all business equipment leases are not recorded as liabilities and thus do not have a bearing on your capital figures. The second area covers the fact that a fixed equipment lease eliminates the need for depreciation, if you had purchased the equipment the cost of the equipment is written off according to use and affects your balance sheet calculations.

Tax-Related Advantages – With a commercial equipment lease your expenses are listed as direct operating expenses, which ultimately lead to a lower taxable income for yourself and your company. Another advantage that makes sense when you compare your leasing arrangement to a purchase is that if you had purchased the equipment, sales tax would then be applied and added to the costs accordingly. In some cases when you lease equipment, sales or use tax is then deducted according to the use of the leased equipment. Whatever the case you should consult with at tax professional to examine the benefits that apply to your company specifically in a lease situation.



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