REAL ESTATE

Dealer v. Investor Status for Real Estate Owners



Dealer v. Investor Status for Real Estate Owners

Introduction

Buy or rent, that makes a person choose? Many investors, such as buyers or lessors around the world asking every time they require assets or property. The answer is never easy, a financial manager in the world to answer these questions at every step. Calculating the after-tax outflows of both options, investors can determine which is more cost-effective choice. Some difficult questions may be asked to determine whether to rent or buy. This will allow the buyer or lessee to determine or call the available options.

Rent vs. buy maintains a large cash flow for many years. Cash flow means exactly that cash flow is called, cash or cash that came in and during the lease or purchase contract. In contrast to buyers, a tenant with credit problems or who can not afford a large payment of rent may elect to purchase the program as a way of ownership. Buyers who can afford to make down payments or mortgage must be paid in advance on any property or assets. Arguing that all advance payments reduce the monthly payments the buyer. If the buyer has a 7.0 or higher credit rating, they can get 0 down low interest rate and that does not affect the buyer's decision that a lot. Depending on the situation, the buyer or lessee, the lease or purchase can occur on any long-term purchase.

Lease

"A finance lease is a contract granting use or occupation of property within a certain period for the exchange of specified lease", (Mifflin, 2000). Finance lease to one side of the property belonging to another person. The owner called the landlord and the borrower is called a tenant.

Finance lease must meet one or more of the following criteria: (1) rental property transfer of ownership to the lessee at the end of the lease. (2) lease contains a bargain purchase option. (3) the lease term is 75% or more of the estimated economic life of the leased property. However, if at the beginning of the lease term falls within the last 25% of the total estimated economic life of leased property, including the first years of use, this criterion can not be used for the purposes of lease classification. (4) The present value of minimum lease payments, excluding that part of the payments representing execlutory costs such as insurance, maintenance and taxes payable by the lessor, including any profit thereon, equals or exceeds 90% exceeds the fair value of the leased property landlord. If the lease does not meet the criteria for classification as a finance lease, it shall be classified as operating leases. Capital lease is often the best choice for equipment and operating leases for better facilities. Finance lease better than buying assets when asset values fall rapidly and need to be updated frequently.

Types of capital lease include financial leasing, operating leasing, selling and leasing back. Financial leasing is a contract offered by the lessor to the lessee, ...