Posted by ray@lcorn on May 05, 2010 at 17:06:11:
Not sure I follow what you’re proposing… probably a mixup in terminology.
A sale/leaseback describes a transaction where the seller leases back all or part of the property after the sale. If you’re the buyer, then the seller becomes your tenant.
Sounds like you’re contemplating a lease-purchase, also known as a lease with an option or lease/option. This is structured so you sign a lease with the owner, and the option to purchase is either part of the lease or a separate agreement. Rent credits are common, usually structured for some percentage of the rent payments to be credited to the purchase price. This is a form of owner financing. Whether the rent credit is a benefit depends on several issues, including tax effects for your business (the lessee), how you intend to take title (i.e. same entity or separate), and the structure of the financing. I’d have to know more to be specific.
Rental increases are completely negotiable. Some owners prefer to tie the increase to CPI, but with the absence of inflation for the past two years or so that’s not been a good index to use because increasing utility, tax and energy costs have outpaced CPI. We use a specified increase, either a percentage (3% per year is our current number), or a rent schedule for the years of the lease with the monthly rent specified as a dollar amount without reference to an index or percentage.