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CRE Tool Hub

Commercial Lease Buyout Calculator

Analyze the "Win-Win" exit price for landlords and tenants.

1

Your Lease (The Liability)

$
2

Market Reality (The Leverage)

If market rent is higher than what you pay, the landlord wants you out. This lowers your buyout price.
$
3

Settlement Details

$

Buyout Analysis

Total Remaining Rent (Face Value)

$120,000

Total obligation before discount

Landlord Incentive (Gain)

$15,000

Profit from upgrading to market rent

Recommended Buyout Price

$95,000

NPV Obligation - Landlord Gain

Face Value Buyout Price

Save 20%

Understanding a Commercial Lease Buyout

Negotiating a lease buyout is about leverage. You have a legal obligation to pay rent, but the landlord has a business to run. If market rents represent an opportunity for the landlord to make more money, you can use that "upside" to lower your specific buyout price.

This calculator finds the "Win-Win" number where the landlord is made whole (and potentially profits) while you escape your remaining liability for less than the face value of the lease.

Frequently Asked Questions

How do you negotiate a commercial lease buyout?
Start by understanding the landlord's motivation. If market rents are higher than what you pay, they may want you out to sign a higher-paying tenant. Present a buyout number that covers their downtime and leasing costs while saving you money compared to remaining rent.
What is a "Good Guy" clause?
A "Good Guy" clause is a limited personal guarantee in a commercial lease. It allows a tenant to be released from future rent liability if they vacate the property compliant with notice requirements and leave it in good condition (acting like a "good guy").
Is a lease buyout tax deductible?
For the tenant, a lease buyout payment is generally deductible as a business expense, but it may effectively be amortized over the remaining term. Consult a tax professional.
How is the discount rate determined?
The discount rate reflects the time value of money. A common benchmark is the tenant's cost of capital or a safe lending rate (like 6-8%). A higher rate lowers the NPV of future payments.
Can a landlord force a buyout?
Usually only if there is a specific "recapture" or "termination" clause in the lease. Otherwise, valid leases are binding, and buyouts must be mutually agreed upon.