Lease or Buy?

1024 492 Monterey Motorsport Park

IRS-recognized cost segregation accounting practice can deliver $82,000 in first-year tax write-offs on a $315,000 purchase at Monterey Motorsport Park

With Rents Rising and Low Interest Rates, Now’s the Time to Buy the Storage Space You Need

When a businessperson or individual investor is in need of commercial space, the same question always arises: should I lease or buy?

Consider this: warehouse/industrial vacancy is quite low in Monterey County — in the single digits. The market for flex commercial space — the type that’s used by car collectors as well as for businesses or individuals who need extra storage space — is extremely tight: at around 1% vacancy. This creates high demand and drives rental rates skyward. So what do you do?

Fortunately, on the flip side of the coin, interest rates for SBA loans right now are near historical lows. Note rates are in the low 3% range — with total APRs including fees running from 4.35% to 4.62% for 10-year to 25-year SBA loans.

So, it makes perfect sense to buy, rather than lease, and pay yourself instead of paying off your landlord’s mortgage. Of course, as with any financial transaction of this significance, you should check with your CPA, attorney or other advisors before purchasing.

Cost Segregation: IRS-recognized Practice Saves Thousands in Faster Tax Write-offs

To make your purchase at Monterey Motorsport even more cost-effective and affordable, the team at Monterey Motorsport Park has paid to have a special engineering study done that can accelerate your write-offs of up to one-sixth of your garage-condo’s value.

The meticulous study supports a practice called cost segregation, something that’s been repeatedly upheld in IRS reviews and audits. Using cost segregation, you’re able to break down the total cost of your garage-condo unit — minus 20% for the land it’s on — into 5-year, 7-year and 15-year components, as well as 39-year property. By depreciating some of the building’s components over these shorter time periods, rather than depreciating the entire value of your purchase using the standard 39-year basis, you can write off an enormous amount in the first year — often enough to offset most or all of your down payment on an after-tax basis.

Going forward, you’ll of course be making monthly payments, but rather than going down the drain in rent, these payments will be building equity in your garage-condo — with the payments locked in at low interest rates. It’s a real win-win proposition. Potential appreciation offers another attractive benefit.

Want to learn more and have something you can share with your CPA? We asked our CPA to help create a highly informative cost-segregation white paper. We’re happy to share that with you and your advisors, and there’s no charge or obligation. You can download it here.

Construction Proceeding Steadily at Monterey Motorsport Park

Located adjacent to Monterey Regional Airport along Highway 68, Monterey Motorsport Park represents the next evolution in upscale, luxury garage-condos. The four-building, 90,000 sq. ft. complex offers a total of 86 units ranging from slightly less than 700 sq. ft. to nearly 2,600 sq. ft. — with amenities such as a gated entrance, remote interactive guarding services, spacious mezzanines for customizing into offices or leisure spaces, optional high-speed fiber-optic Internet and cable TV service, and much more.

Construction has been underway for months (see our live cam) and will wrap up in Q4 of this year. If you’d like to know more about what this uniquely conceived car community and multifaceted storage facility offers you as a business owner or investor, contact one of our brokers or development team members:

For SBA Financing information contact: Bruce Whitaker, Senior Vice President, Business Development TMC Financing at bruce@tmcfinancing.com, 408.483.9599

For pricing or additional information, contact:

You can also get in touch with Gordon McCall, who’s part of the development team and will be relocating his business — McCall Events — to the community upon build-out, at mccall57@aol.com or call (831) 372-9311. Or you can contact Ralph Borelli at ralph@ralphborelli.com or call (408) 521-7117.

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