Buying Commercial Real Estate

There are many variables to consider with commercial real estate. Will you be buying an existing building or constructing a new one? How much of the property will you occupy? Will you lease or rent out any portion of the property? If so, what income do you expect to receive in rents each month? What will owning your building do to your monthly overhead? Will your payments increase? It is important to ask yourself these and many other questions when considering to invest in commercial real estate.

Real estate is a business of it’s own. Make sure that purchasing your building does not become a distraction to your business. Understand the markets so that you fully know the risks. Find a good adviser who is very familiar with the industry. Don’t buy your business location thinking it will be the same as purchasing your residential home. These markets are very different.

Although there are many considerations to be had when deciding whether to purchase commercial real estate, there are also several benefits to owning your own building. If you do plan to lease or rent space you can generate income to offset overhead expenses. Your business will also take advantage of depreciation which can be stretched over longer periods of time than equipment and other business assets. This can reduce your tax liability allowing you to improve your take home cash or increase equity in the business. Some business owners just like the security of knowing they own the asset and rents will not increase unexpectedly.

Whatever reason you have for considering buying commercial real estate, make sure you take the time to think the transaction through. Don’t rush into a “good deal” blind. This decision can have major positive and negative consequences. Your lender will be reviewing all consequences to determine whether you and your business are a good risk.

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