Lease a Business or No?

Dawn shouldn't let her friend lease her daycare business, but she may let her manage it with the option to buy it later.

QUESTION: Dawn is completely out of debt and owns five rental houses.  She also owns and operates a daycare business.  A friend wants to lease the entire business.  Is that a good idea?

ANSWER: That’s not a good idea.  You may want to let her manage it for a while with the option to buy it later.  That’s a bit like leasing with an option, but you should not lease the entire business.  If you lease the business to her and she runs it into the ground you’re still responsible for cleaning up her mess. 

You may also want to let her buy the business from you and rent the property.  You could also let her manage the business for a percentage of the profits with the right to buy the business.  Those are the best options for this situation.

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