Lease vs Sell
My father owns both his building and the majority of the company that leases the building. We pay ourselves a generous rent and are just about to renew a five year lease. Would it be wise to sell the building, hopefully for a premium with the five year lease in place  or should we hold onto it for the steady cash flow? 
[{"id": "d28ivem", "text": "How many SF is the building?\nis there any major incentive for the company to free up a decent amount of cash right now by selling? \nif your father's company has good credit and the building is of substantial size, you will be able to command a higher sale price if you are willing to do a lease longer than 5 years. At least a 10 year lease but something longer would be more attractive to a buyer looking for a solid investment option. ", "replies": [{"id": "d295z4z", "text": "\nThe Building is 14 000 SQFT. No immediate need to free up the cash other than re investing ect, The longer lease is definitely something we could discuss. Thanks for the idea", "replies": [], "depth": 2}], "depth": 1}, {"id": "d28wa44", "text": "&gt; My father owns both his building and the majority of the company that leases the building  \n\nDepends on what your plans are for the company. In a case where the owner of the real estate &amp; the sole tenant are related, you have to take into consideration what you know about the future cash flow. If you're controlling the source of the rent, then you can be very comfortable. If you know you're going to sell the operating company, you should consider selling the property while the lease is in place. What's to stop the new owner from moving to another space? ", "replies": [{"id": "d296g03", "text": "Thanks for your reply. \nMy father has recently sold part of his company to private equity and while the rent pay is good, he no longer has complete control like he has in the past. My idea is once the lease is in place we sell the building and re invest else where. ", "replies": [], "depth": 2}], "depth": 1}, {"id": "d2980f4", "text": "If you do sell it and want to keep the money in real estate, look into doing a section 1031 Exchange to avoid/defer taxes on the gain. Get it figured out before you list it and before you put a contract on any other property. The rules are very strict and you have to do everything by the book or the exchange can be disqualified.", "replies": [{"id": "d29cc66", "text": "We are located in Canada so i will do some research on what they have to offer and talk to our accountant prior to any decisions being made. Thanks for the suggestions. \n", "replies": [{"id": "d29cpzh", "text": "Ah, well that's different then. I did a quick search and Canada does have something called a Section 44 exchange, but it appears to be a bit different than our 1031. May be worth looking into though.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "d2gxbta", "text": "If you are selling a building that the company will be signing a lease from, you essentially are setting the sale price based on how much rent you are willing to pay.\n\nThe cap rate will be more or less set based on the location/condition of the property and the credit risk of the company as a tenant, and how difficult they would be to replace as a tenant at a similar rental rate. So for a given cap rate, the higher the rent, the higher the sale price.", "replies": [], "depth": 1}]