When starting a small business, many people choose to rent their storefront property. This makes sense, as they’re usually just starting out and want to be safe on money, thus renting in order to not drop as large a sum of cash. Commercial real estate rises and falls just like any market, but with a steadily growing economy as well as low-interest rates, now is the time for business owners to purchase their buildings. Here are a few reasons why.
As I already mentioned, renting is a common option for small business owners. If you were to ask many of them though, they’d tell you that rent is their second-largest cost after salaries. Depending on the location, and how big the space, renting a property for your business can become extremely costly. If you were to purchase the property, you could instead build upon your wealth by making yourself the landlord. You may even be able to lower your overall facility costs, depending on what the situation was like while renting.
YOU Are The Landlord
When you buy commercial real estate, you can potentially be given the opportunity to become a landlord. This is typically possible due to certain loan programs, with one of the most popular programs only requiring the owner of the building to occupy 51% of the building. If you get a loan like this, it allows you to buy your building, occupy the majority of it, and then rent out the rest to someone else. This can allow you to generate additional income, which will be great when trying to pay off that loan. Another potential opportunity is renting out your building to whoever takes over the business after you. You may decide one day to sell the business off to someone else, but continue to own the real estate, renting it out to whoever now owns your business.
When it comes to commercial real estate loans, rates are at an all-time low. Programs such as the SBA 504 Loan Program are at the lowest they’ve ever been, so it’s a great time to think about whether or not buying commercial real estate is for you. While interest rates have always been rather favorable, they’re guaranteed to fluctuate at one point or another so it can be wise to take advantage of their favorable position while you can.
Buying commercial real estate is almost always a good idea, but doing so now is an even better idea than usual. With so many circumstances in the buyer’s favor, there really isn’t a better option.