It was only a year ago everyone was in a rush to buy a commercial property to operate their growing businesses out of. Now, a lot of us are wondering how we can free up some cash to keep our businesses afloat through this downturn. If you're in the group looking how to free up some cash, perhaps you may want to consider a sale-leaseback arrangement.

The first question to ask yourself is, do you own the real estate you operate your business out of? If you do not, then a sale-leaseback is, unfortunately, not for you. If you do, then you may have an opportunity. The next question to ask yourself is, how much equity do you have in your building? If you have enough equity, it may be better for you to try and arrange an equity take-out loan with your banker. This will allow you to keep your building and still free up some cash.


Okay, now if you do not have enough equity in your building for an equity take-out, then you may want to consider a sale-leaseback arrangement. A sale-leaseback is exactly what it sounds like. You sell your building to an investor and lease it back from them. This is a win-win arrangement for both parties because in this kind of market, investors are always on the lookout for fully leased buildings with good tenants and you find someone to buy your building when you most need the cash.  With such a situation that benefits both parties, your commercial real estate agent is much more likely to be able to put together a successful transaction that gets you a fair price and a reasonable lease. Once the sale closes, you should free up a reasonable amount of cash to help get you through the downturn.

Win-win