There are many reasons to invest in a post office today


One of the main advantages of buying a post office is that you are purchasing the property "fee simple", meaning that you own the land and the building, but are also buying the rights as the landlord to take over the lease with the U.S. Postal Service ("USPS") as the tenant.  

The USPS has "leasehold rights" and, because they are the ones that have drawn up the leases, they tend to favor the postal service.  However, having the USPS as a tenant means the rent is backed by the U.S. government, which provides valuable safety to your investment.

Why Buy a Post Office?

  • Safety: The United States federal government guarantees the rental income, providing exceptional security on your investment.
  • Availability: Only about 25% of all postal facilities in the U.S. are owned by the United States Postal Service.  The remaining 75% are privately owned and leased to the USPS.
  • High Returns: Even though the income is guaranteed by the U.S. Government, you could achieve extraordinary returns of 6-30+%.  However, all investments are subject to risk of loss.
  • Standardization: Almost all leases are on United States Postal Service forms, so once you familiarize yourself with the terms, it is extremely easy to pick and choose which properties fit your investment parameters and needs.
  • Diversification: You can purchase small postal units around the country with different features to diversify your investments.
  • Flexibility: Purchase prices range from a few thousand dollars to several million dollars, so there are opportunities to fit every investor's budget.
  • Tangibility: Own something tangible - a building and land - that will always have some value, rather than a piece of paper.
  • Tax Advantages: You do not have to pay capital gains taxes on profits from the sale of real estate, provided that you re-invest those profits into other "like-kind" real estate within a certain period of time.
  • Rental Income: Rental income collected from tenants may cover your mortgage costs, insurance, and maintenance upkeep. 



How Post Offices Come to Be


Owning a U.S. Postal Service property has several other advantages not available in most commercial real estate investments. Many investors do not realize that most USPS occupied buildings are not owned by the government but leased to them by owners/investors.  Most, but not all, post offices have been designed for use by the postal service.

When the U.S. Postal Service decides they need a post office building, but there are no suitable existing spaces, they send a site person to the area to take an option to buy the land.  Then, through a bidding process, a contractor who has been approved by the postal service makes a bid by filling in a blank USPS lease form with their proposed rental rates, terms, and conditions.  The USPS then chooses a contractor to build the facility to the USPS's specifications

The winning contractor then has to buy the land under the terms of the USPS option to purchase the site.  The base, or initial, term of the lease is generally 10, 15, or 20 years with a series of five year options.  The lease can have various riders and amendments and these affect the value of the investment.


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How did the US Postal Service become what it is today?


The U.S. Postal Service ("USPS") is the successor to what used to be a full-fledged government department - namely, the Post Office Department, founded in 1792.  It was such a crucial part of the government that its rationale is mentioned in the U.S. Constitution and the Postmaster General was in the line of succession to the Presidency - last in line, yes, but in line all the same.  

This remained the status quo until President Richard M. Nixon's administration reorganized the Post Office Department in 1970 in response to a debilitating strike by postal workers, establishing the newly branded USPS as a "corporation-like" independent agency.  

So what does this mean?

It means that, as of July 1971, when the reorganization took effect, Postmaster General was no longer a cabinet-level position appointed by the President.  Instead, a Board of Governors with nine members was appointed by the President.  These nine, in turn, chose the Postmaster General.  These ten individuals, in turn, then chose a Deputy Postmaster General to serve as chief operating officer.  The new arrangement also called for a Postal Rate Commission consisting of five President-appointed members in order to provide a check on those who controlled the USPS's financial operations.  (As of December 2006, the Postal Rate Commission became the Postal Regulatory Commission, with somewhat expanded powers.)

The result is a perplexing organization that is neither a Federal agency nor a private corporation.  Nor is it a hybrid, government-owned corporation, like Amtrak, for example.  In fact, the USPS isn't really a corporation at all.  Because the Board of Governors does not have the same sort of fiduciary responsibilities and liabilities as real corporate directors, it amounts to little more than window dressing. 

In fact, the USPS's only real shareholder remains the U.S. government, and it has no actual board of directors other than Congress - more specifically the Subcommittee on the Federal Workforce and the Postal System of the House Government Operations Committee.  But Congress, as we know, only deals with emergencies; it does not engage in long-range strategic planning or market research.  It does not evince responsible financial behavior or exemplify corporate best practices of any kind - especially when it comes to oddball appendages like the USPS.  

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