Purchasing commercial property can be a good long-term investment plan as an alternative to leasing or renting space. If you’re considering property ownership for your business, here are some key things to consider before making this investment.
Under what circumstances should I consider investing?
You should consider this kind of investment if you’re looking to own the business for the long-term or to secure a specific location. You may also consider this option if your current rented space needs costly leasehold improvements to grow the business, or you’re making lease payments comparable to a monthly mortgage.
Do the considerations vary for different sized businesses?
For some small and medium-sized enterprises, employee parking can be an expensive overhead cost, and may convince you to purchase the property if your firm requires a larger parking lot. On the other hand, larger buildings tend to be more expensive to buy and manage, meaning the maintenance costs may eat into your operating funds.
When is it not a good idea to invest in commercial property?
If your company is in the early development stage, it may need more money to grow, and those requirements compete with real estate costs. Also, location for many businesses is critical. If you’re not sure if your business is in the right place, a shorter-term lease may be a better option than trying to buy the property where your company is located.
How much of a down payment will I need to have?
Buyers are typically expected to put up a 30 – 35% down payment on commercial buildings, although that figure may be reduced if you use your home or surplus cash in the company to secure a loan.
Investing in commercial real estate can provide a great potential for profit when you sell. A great first step is to talk to an account manager about your individual situation. Call us at 1.800.728.6440 or fill out a contact form to book an appointment today.