Posts Tagged ‘Owners’

Triple net leases are becoming more well loved in the Houston area. Here, they are obviously less expensive for the property owner, and can allow a truly passive form of income for the property owner. With one of Houston’s triple net leases, a property owner can be hands off, which is exactly what more and more property owners are looking for. Of course, there are down sides to them as well.
Most triple net leases give control of the property to the lessee, which can be either a excellent deal or a terrible deal, depending on who the property owner is dealing with. They provision the renter to pay for maintenance as well as other costs associated to property ownership.
Before ever purchasing one, potential owners should have these leases looked over by a Houston real estate attorney to be assured that the property owner can still control structural changes to the property as well as enforce the general maintenance that the property requires.
While a property owner can simply go online and download a lease agreement, these leases in particular can work against the owner of the property. Legally speaking, it is very hard for a property owner to deny liability for destruction of property, especially if they are being held accountable by a third party. A well written, clear and concise lease can help avert such situations.
Every triple net lease property for sale in Houston is going to vary at least in structural repair requirements. Many of them require the tenant to pay for everything except roof repairs while some require everything including roof repairs. A bond clause requires the tenant to pay for the property even if the property doesn’t exist anymore, such as the loss resulting from fire, flood, earthquake, or other natural disasters.
Triple net leases are a hard sell for potential tenants, regardless of whether you are referring to residential tenants or commercial tenants, and there has to be a motivation for the tenant. There is an exceptional amount of negotiation associated with them, and potential purchasers should yield to caution when entering a pre-existing lease.
Leases for sale with huge profit potential can be hard to find. They take a bit of cultivation, and a bit of finessing to make the perfect situation. If the tenant of a triple net lease is not worthy of the sale, the sale will often never materialize.
Both the landlord and the tenant can benefit from a triple net lease and can experience fantastic frustration from them too. Keeping in mind that the tenant who agrees to one needs to get something out of it, buy of a triple net lease in Houston can lead to more pitfalls than necessary if the situation hasn’t been scrutinized.
In most cases, residential leases in Texas are rare. It costs too much money. The only notable exception to that rule refers to some apartment buildings, usually units that house between 6 and 12 units. These can be an acceptable alternative to home ownership under the right circumstances. The vast majority of triple net properties in the area are commercial properties.
Finding an ideal triple net lease for sale in Houston or the surrounding area can be considered an impossible task. Because they are unique between landlord and tenant, most ideal situations are made rather than bought. Those leases which are up for sale are often excellent situations, but a potential owner is hard pressed to find a perfectly ideal situation unless they have made it for themselves.
Making one and then selling it can be ideal for those looking for a high end real estate business. Some of these leases are signed for as long as 50 years, offering up some very tempting terms for a potential buyer. After all, provided that the lease is signed for an extended period of time, the lease can provide a significant income-expense ratio for the owner. Additionally, the resale of one can also bring in revenue.
Anyone considering purchasing a triple net lease for sale in Houston should never consider the buy without the help of an attorney for the simple reason that these leases are personalized per situation.
A fantastic find will still be a fantastic find after a lawyer looks over the lease. A excellent find can turn into a fantastic find after an attorney evaluates the lease. Then of course, a lawyer can save you much headache and pain when it comes to a triple net lease that shouldn’t be touched with a single dollar.

Within the past decade, equipment leasing has mushroomed into a multi-billion dollar industry and currently accounts for over one-quarter of all capital expenditures in the United States.
There are five major reasons, or category of reasons why lessees prefer equipment leasing versus a loan for equipment acquisitions.
1) Economic or Financial
2) Financial Reporting
3) Income Taxes
4) Technological
5) Flexibility
Let’s examine each of these more closely.
1) Economical. The economic attributes of an equipment lease can be considerable. The monthly rentals in the lease can be quite low when compared to the loan payments levied by a bank, due primarily to the impact of the residual value in a lease.
The tax benefits alone that are generated in the transaction will influence the lease payments as well. The lessor can lower the equipment lease payments when receiving value from tax benefits, although, the lessor may use tax benefits to increase its yield.
Longer lease terms also help to lower the lessee’s lease payments. The repayment of the equipment cost is spread out over more periods so less payment needs to be charged each period to recover the entire cost.
Equipment leasing also requires small, if any, up-front cash outlays when compared to a bank loan. Many leases require just one payment up front versus the normal down payment requirement on an installment loan for a lessee with a excellent credit history. The combination of lower up-front and lower subsequent payments helps to preserve working capital.
Additionally, equipment leasing provides the business owner with another source financing, thus allowing them to diversify their funding options.
2) Financial Reporting. Entities are constantly striving to have their financial statement look as strong and healthy as possible to their shareholders and lenders. When a company buys equipment and finances it with a loan, an asset, as well as the corresponding liability, appears on the balance sheet. If, but, the company chooses equipment leasing over a loan, and that lease is classified as an operating lease, then no asset or liability would appear on the company balance sheet. Hence, the term operating lease has become synonymous with off-balance-sheet financing.
Off-Balance-Sheet financing is sought after for a variety of reasons: to keep debt off the balance sheet, to improve the financial ratios of a company, and to potentially enhance the company’s ability to borrow in the future. It is also conceivable that in the early years of the lease, the operating lease will improve the company’s reported earnings when compared to a capital lease or buy.
3) Income Taxes. The value of tax benefits to the lessor can influence the lease payment charged to the lessee. A built-in reciprocity exists in tax leasing, in that the lessor-owner in a tax lease receives the tax benefits given up by the lessee-user and, in return, may pass those benefits on to the lessee in the form of a lower lease payment. The lessee also receives a tax benefit since the lease payments are fully deductible.
Another income tax factor to consider is the Alternative Minimum Tax or AMT, which is very complex. AMT is a penalty tax imposed by Congress. Equipment leasing, not purchasing, helps an organization avoid falling into this penalty situation, thereby saving taxes.
4) Technological. In today’s rapidly changing environment, there is always the risk that high technology equipment will become obsolete. Indeed, the risk of technological obsolescence is one of the primary reasons for leasing. Equipment leasing can help lessees transfer the risk of owning equipment which is no longer technologically useful.
The transfer of risk can be accomplished in several ways. The most obvious would be for a lessee to enter into a small-term agreement, thereby requiring the lessor to assume the technological risk through residual value. If the equipment is still useful at the end of the lease term, the lessee could then renew the lease. If the equipment becomes obsolete during the lease term, the lessor may replace it with newer technology through what is know as a takeout, or an equipment upgrade.
In a takeout, the lessor, through its access to the secondary market, will find a new home for the original equipment because equipment that is obsolete to one entity is not necessarily obsolete to another. For new and untried technology, many lessees prefer leasing the equipment on a small-term or experimental-use basis.
5) Flexibility. A company may simply need the use, not the ownership, of a piece of equipment. Leasing can help a company avoid many of the headaches associated with equipment ownership. For instance, leasing can transfer the burden of disposing of the equipment o the lessor, who typically has better access to the used equipment market. The lessee can also contract with the lessor to take care of the other aspects of ownership, such as insurance, maintenance and property tax, by bundling these costs into the lease payment. Many lessees appreciate this one-stop shopping aspect of equipment leasing.
Many owners/managers prefer equipment leasing, as opposed to purchasing, because leasing enables them to buy needed equipment out of their operating budgets, without the necessity of going through a lengthy bureaucratic capital budgeting and approval process. Lessees may also benefit from very flexible structuring practices such as step or skipped-payment leases. These type of payment schedules are useful to businesses in industries that are seasonal and disruptive to cashflow.
Note: Business owners should always seek advice from their tax professionals before a major equipment acquisition.
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