What is a direct rental?

Direct rental is a financial agreement that the landlord buys and leases it directly to the tenant. In such cases, the property owner never intends to use it directly for his intended purpose. Rather, it is simply a mechanism for investing and achieving future profits. The first condition to be met is the collection of minimum rental payments. The second factor is that there are no main uncertainties in terms of the amount of inevitable costs that may arise. In other words, both parties must be aware of all costs associated with the lease agreement in advance. It can be a bank or some other type of investment company. No rental, which does not include third -party owners, can not be considered a direct lifelong.

In some respects, direct rental can be very attractive to the company that needs to perform work. This is especially true for companies in heavy production and construction. In these cases may not be equippedToo cheap. Instead of using it so often and paying for, even if it sits idle, it can make sense only when needed through direct rent.

For this reason, heavy machines can be good candidates for direct rental. Very few general suppliers, such as their own cranes when working on higher construction projects. Rather, they rent a crane from the owner who can provide the one they need. Since the crane owner is usually not a manufacturer or a seller, it can be considered a direct rent.

direct leasing offers a number of advantages. For example, one thing with which society has to cope with is the depreciation value. With direct rental, because the company directly does not own equipment, it is not concerns. Direct rent also requires less initial cash expenses than direct purchase. This releases valuableCapital for other projects.

Further, while direct rental is business expenses, the company's debt is not counted. Since the company was not interested in using the equipment, it may be more attractive for investors. At least lower debt loads will help lead to a more favorable bond evaluation. In some respects, the direct rent is therefore a way to incur a debt without actually counting this debt against the company in other ways.