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Owning the Building: Sell It, Lease It or Keep It

Many owners hold their building through a separate company, and Arlington Business Brokers Ltd sees that choice change how a sale is planned.

Think of the building and the business as two deals.

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Quick takeaways

  1. Treat the building as its own asset, with its own value and its own buyer.
  2. A below market rent looks like a perk to you but lowers the price a buyer will pay for the business.
  3. You can sell both together, sell the business and stay as landlord, or sell the property later.
  4. Get a market rent review and a signed lease before you go to market.

Two assets, two valuations

A business is priced on earnings times a multiple. A building is priced on net operating income divided by a cap rate. Mixing the two leads to bad math.

Owners also misjudge their building's value, high or low. A market review is worth doing either way.

The rent question

If your company pays itself low rent, the buyer will assume market rent and lower the business earnings accordingly. That can reduce the price of the business directly.

Document a fair lease with a set rent, renewal terms and clear assignment language before you list.

Your options

  • Sell the business and the building to one buyer
  • Sell the business and lease the building to the buyer
  • Sell the building to an investor and lease it back for the buyer
  • Keep the building and sell it later

Many business buyers cannot or will not buy the property too, so plan for it to have its own strategy.

Staying on as landlord

Turning your building into a long lease with the new owner swaps one lump sum for steady income. It also ties you to the buyer's success, so choose the tenant carefully and get a strong lease.

Check the lender and the title

If the building carries a mortgage, ask the lender how a sale or a new lease affects the loan. Order a current survey and title review too, so the buyer's lender does not find a surprise.

Timing and taxes

Interest rates affect property values differently from business values, so the best moment to sell each can differ. Tax tools exist for real estate, but they should support a decision, not drive it.

Fuel stations and hotels bring extra property issues, as the fuel station page explains.

To start, ask for a free value check and tell the broker you own the building.

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