The Age Old Dilemma of Property Ownership Wenatchee WA

One of the most important aspects of any printing business is "location, location, location." Deciding on leasing or owning the premises where the business is located is an important decision owners wrestle with almost everyday. Of course, this decision is usually based upon cost, but there are significant differences between owning and leasing property that printers should consider.

Owning Your Own Patch of Earth

If a business considers owning the property where it is located, it must determine the taxes, current ownership, financing, zoning, easements, and maintenance.

If the costs of property maintenance or taxes are too high (or there is an expectation that taxes will rise in a particular area), it may make the cost of owning the property prohibitive. Further, businesses must decide how to own the property.

For example, there are consequences to individual property ownership as opposed to business ownership. Similarly, financing considerations must be explored, including if the purchase will be self-funded, or a loan or a mortgage will be sought to pay for the property. Zoning and easement issues also may arise, and, if the printing business needs commercial and/or industrial property, the property's zoning must allow it for this type of business.

Finally, maintenance of the property is critical in any review. Printing businesses should avoid property that requires costly maintenance.

Leasing Someone Else's Problems

Although ownership may seem the more viable alternative, leasing may offer distinct possibilities.

There is a substantial cost with leasing because, unlike owning, it does not build any equity (unless there is a lease-to-own or option contract). Leasing is also only as good as the landlord who owns and manages the property. For most commercial sites, a landlord must take responsibility for the property and maintain it in an appropriate manner. Thus, before leasing, printers must obtain assurances from the landlord that this will occur.

Some landlords attempt to shift many of the expenses and burdens to their tenants. That is, the business may be required in a negotiated lease to pay for utilities, taxes, and property maintenance. These items are usually negotiated before the lease period.

Another important term in any lease is its length. Most landlords will try to obtain a long lease period so they will assure themselves significant income over time. Some printers may want this type of long-term lease, while others may be in a state of flux where they would like to have options, and, thus, require a short-term lease. Some of these short-terms leases may even cost more than a longer term lease. In any event, leasing property may present substantial benefits to a printing business.

Decision-Making Time

Essentially, printers must weigh the costs of either a lease or ownership before arriving at a decision. Initially, they must decide if they want to remain at one location (if it is a good investment) for a significant time. Others may consider a shorter period to be more advantageous. Nonetheless, cost considerations will most likely determine the location.

In sum, printers must do an appropriate cost-benefit analysis, and understand the needs of their business, before making a decision on owning or renting real property.

Ernest E. Badway is a partner with the New York and Newark, N.J., law firm of Saiber Schlesinger Satz & Goldstein, LLC, practicing business law where he advises and counsels numerous printing clients on corporate, business, litigation, employment, and many other matters. Mr. Badway may be reached at eeb@saiber.com, (212) 461-232, or (973) 622-3333.