Many South Florida trade and industrial business owners also own the building, shop or yard their business uses. When it is time to sell, that real estate gives you options and is often a large part of your total wealth. Here is how to think about it.
The business and the property are valued separately
A business is valued on earnings it produces. Real estate is valued on its own merits: location, zoning, condition, and the rent it could earn. Keeping them separate in your thinking makes it easier to compare offers.
Option 1: Sell both
You sell the business and the property to the same buyer, usually in coordinated transactions. This gives you a clean exit and potentially a larger cash payment. It suits owners who want to be fully done.
Option 2: Sell the business, keep and lease the property
You keep ownership and sign a lease with the buyer. You become the landlord and collect rent. This can create ongoing retirement income and lets you keep an appreciating asset. You will want a well-drafted lease with a solid tenant, appropriate term, rent increases and clear maintenance responsibilities.
Option 3: Sell now, sell the property later
Some deals include a lease with an option or right of first refusal for the buyer to buy the property later. This can bridge a gap if the buyer cannot finance everything at once.
Things to consider
- Taxes. Selling the real estate may have different tax consequences than selling the business. Ask your CPA about options, including whether a 1031 exchange applies to your situation.
- Zoning. Industrial land with outdoor storage is limited in South Florida. Confirm your zoning and any nonconforming uses.
- Environmental. For shops, yards and car washes, buyers or lenders may want an environmental assessment.
- Lease rate. If you lease back, the rent should be fair market. An above-market rent can lower what a buyer pays for the business.
Why our background helps
Business Hunters is backed by the Prop Hunters team, South Florida real estate investors since 2014. We can evaluate the business and the property together and offer whichever structure works best for you: buying both, leasing the property from you, or a combination.
This guide is general information, not legal, tax or financial advice. Consult your own attorney and CPA.