Rent Expense Add-back

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by a searcher from George Washington University
in Milton, FL 32571, USA

1yr ago

Rent Expense Add-back

Is rental expense a legitimate add-back if the deal includes the real estate? I can see where the seller is coming from. However, I'm conflicted. If the business ever moves to a leased property, this becomes a large expense.

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reply by a lender 1yr ago
from University of Missouri in Denver, CO, USA

Agree with ^redacted‌ and many of the other comments above. Usually an addback if purchasing the RE and will take the new loan payment that will account for the cost.

reply by a searcher 1yr ago
from George Washington University in Milton, FL 32571, USA

Appreciate all the comments. Multiple perspectives here, which I great. My takeaway from this is rent shouldn't be an add-back for business valuation, but will be an add-back for DSCR and lender purposes. This is helpful and will guide negotiations.