If you are a business owner, at one point in your business journey, you have probably had the thought of whether or not you should own the building your company occupies or lease it from someone else. If you have common sense, you would think that buying the facility and build equity in the property is the way to go. However, when dealing with something this big, the decision is rarely easy to make. There are many factors that could come into play to make purchasing commercial real estate a bad idea. I will go into some of these factors in greater detail.
Probably the biggest factor that comes into play is the financial limitations that purchasing office space has on a business. Do you really have enough money, or are you making enough money each month to make it happen? What about the tax benefits? What about equity? Is the local commercial real estate market growing or shrinking? How about growth? Do you have enough room to grow your company in the building your are considering purchasing? All of these are good questions that need to be answered before you make any decisions about your big purchase.
For most business owners, the number one questions is, do I have the required 10-15% to put down on the property and can the business afford to tie that amount of money into the property? If you didn't realize, commercial real estate is not a liquid asset, you can't just pull money out of it at any time. If purchasing office space makes you cash poor, you might want to put your plan on hold.
Another huge factor that need to be taken into consideration besides the money aspect of the purchase are your growth plans. If your business is in the initial growth phase and are expecting to expand in the near future, the business owner should know what he plans to do with the building it they are forced to move out due to company size. Will they rent the building, sell it to another company, or even keep part of their operations in it and expand to another building. These are all simple questions that require very complicated answers.
Commercial loans have never been easier to obtain then at this time. If it in your company's best interest to buy some commercial real estate, now is a great time to do so. Just make sure that you can do it financially, it is not worth losing your business or struggling horribly, just because you want your own office space. Take your time, do your research, and make sure that this is for you.
