Why business owners should own their property
Is it time for you to buy the business property you’ve been renting?
You might be in a position to gain if you’re a small business owner who currently leases office or retail space.
Of course, whether you decide to buy or rent will rely on a variety of aspects specific to your company, like its location, revenue, and experience in the industry.
But investing in commercial real estate provides certain broad advantages for your company.
Here are the top five advantages you may look forward to if you decide to make the switch from
renting to owning.
1. The ability to build equity in your property
The fact that every monthly payment goes straight into the landlord’s pocket as a result of renting a business property is arguably its biggest disadvantage.
You can, however, start accumulating equity in the property right away if you buy that space.
If the value of that property rises over time, you can profit by leasing or selling the structure.
A cash-out refinance is an option available to those who obtain a loan to assist in the purchase of the commercial real estate.
A borrower can turn their current equity into cash by refinancing and taking out a bigger loan.
The remainder can be utilized for future investments or business developments after the initial
loan has been repaid in full to the lender.
2. The creation of additional revenue streams
You have the chance to create a new revenue stream by leasing the extra space to tenants if you purchase office, retail, or warehouse property that your company can’t fully use.
During times when business is sluggish, rental income can significantly boost your revenue. For those trying to launch a small business, this can be a genuine source of comfort.
It should be emphasized that hiring tenants necessitates project management skills you might not already have.
If you do want to rent out a portion of your commercial property, think about spending money on property management education or working with a specialist.
3. Tax benefits
You are in a position to profit from tax advantages that could have a big influence on your bottom line if you own commercial real estate.
As an owner, you can benefit from mortgage interest write-offs and depreciation deductions,which can reduce the cost of your initial purchase and typically lessen your annual tax burden.
To find out more about the advantages (and possible disadvantages) of owning commercial real estate, be sure to speak with a tax expert.
4. Freedom and control
You have few options when renting a business property for renovations or extensions. Those that love having total control over every area of their small business may find this to be a significant source of irritation.
You have the option to completely personalize your workspace once you own your office or retail location.
For instance, you might finally add more space for tables or revamp the kitchen if you bought the building where your restaurant is located.
It can take a long time for a landlord to authorize these kinds of adjustments, and by the time you are finally allowed to make one, your company has already sustained irreparable harm.
Consistency also comes with control. Commercial property owners never have to worry about a landlord raising the rent or changing the rules in a way that could limit their ability to grow their business.
5. Appreciating Value
Investments in commercial real estate have a history of rapid growth. Commercial real estate can increase in value based on its capacity to generate income, in addition to the general demand increases that result from scarcity in an active market.
This implies that you can help to raise the asset’s worth if you are the owner of business property. You can effectively increase the value of your initial investment by remodeling the building or adding rentable space. One of the key advantages commercial real estate offers over stock or bond investments is that it is a hard asset.
There are drawbacks to owning commercial property as well. For those just starting their business, the purchase price alone could be overwhelming. For business owners who lack the resources to address them, additional difficulties related to building repairs or tenant vacancies can be crippling.
However, you might discover that the advantages of finally having your workplace or shop space exceed any potential drawbacks. Ownership can be your best option for success if you appreciate day-to-day control and have a long-term vision that involves both your firm and the space it occupies.
Finding the financing option that works best for your company should be one of your first steps if you’re interested in buying a commercial property.
Please get in touch with us to find out more about how REZO can assist you with owning your business property.