Commercial real estate - Article


SHOULD I PURCHASE OR LEASE:

If you are a business owner operating from a lease hold estate and is contemplating the move to a different location, there are more reasons to purchase the new location than leasing. Advantages include protection from termination of leases, lease evictions and raise of rent. An investment that spans far beyond the usual twelve to sixty month term of a lease. Granted, some leases can extend beyond 20 years. Long term leases are very desirable for the property owner because it provides income to support a loan should the owner secure a mortgage against the property. All Commercial Finance is great source for long and short term commercial real estate loans

This common sense approach is not exclusive to purchasing an existing property or a particular business property. It`s open season on types of business loans which mean any business will do like Funeral Homes, Restaurant , Pizza shop, beauty salon, Bakery, Printing, Equipment vendor, Trucking company, Automotive service and repair, Appliance store and Shopping outlet stores to mention a few of many. If you`ve bought or constructed a property that required a construction loan and paid more than $1 million within the last 15 years, your company could benefit from the tax savings generated through a cost segregation study.

As a business property owner, you may qualify for a Section 1031 deferral. The 1031 tax-deferred property exchange allows real estate investors to defer capital gains taxes on appreciated property

If you intend to remain in the location, purchasing the property can be a good investment. This is particularly beneficial if you have more space than you require to run your business because you can lease out the un used space, earning rental income. You can use the income from your rent to help pay your mortgage which is available through All Commercial Finance

One of the major advantages of buying a property for your business is that you have full control over the property. You have the power to decide what needs to be done in terms of designing the property according to your business`s requirements and won`t need the landlord`s approval for this.

One of the main advantages of purchasing real estate for your small business is that you can build equity in a property which you later leverage for expansion. If you have equity in real estate, it is easier for your business to get loans, which you will eventually need as you grow. An option not available to you as a tenant. But, you will be providing the cash to make the landlords mortgage payments.

Buying a property instead of renting is a great way to keep your costs fixed. Particularly with a fixed interest rate commercial real estate loan. Many businesses will hold a long-term lease of 10 to 15 years on their building, but at the mercy of their landlord as to the terms of their next lease. Usually, the lease will also escalate after a few years, and this increase in cost is something that you cannot control - because you don`t own the property.

When you buy your own commercial property, you`re paying the mortgage, which you can get through All Commercial Finance, for a property that you actually own. Unlike when you`re renting, you`re paying the lease but the property will never be yours. Obviously, it`s better to pay for something that will eventually be yours.

As business owners, writing off expenses and depreciation as your property increases in value over time is a huge benefit. However, unlike renting, the money you use to purchase your facility is not deductible, but you are allowed to recover this over time through yearly depreciation deductions

If you have the cash for a down payment on a commercial property loan, and if you are planning to stay in the same location throughout your business`s lifetime, then buying a property is a great idea. Often, your mortgage loan payments will most likely be much lower than what your lease would cost you - plus you get to own the property you are paying for.

If you have found a good property that`s for sale at a low price, and if you think that it would meet your business`s space requirements, it`s best to grab the opportunity and buy it. You may need to spend some money available from All Commercial Finance for repairing the property (usually a hard money real estate loan), but it will become a valuable business asset which you can use for your own benefit later on.

If you have a stable business and you won`t be expanding or relocating, then owning a property is great because you`ll benefit from the increase in property value. After all, most real estate properties appreciate over time. This can be a big benefit when you decide to sell your property by the time you retire

If you own the property, it`s easier to invest in energy-efficient upgrades that will help your business. For instance, you can insulate the building, upgrade to energy efficient lights and HVAC system, and solar panels to help lower your energy cost. These upgrades are not something you can easily do when you are just renting. Larger ticket items such as HVAC units can be financed as an equipment loan.

One of the perks of owning your business`s property is that you have the flexibility to do your business without having to deal with the landlord`s restrictions. You can use as much parking space as you want, play music, throw corporate parties, stay late, or even work on weekends and holidays without having to ask for the landlord`s permission.

If your business is being visited by customers regularly, you want to maintain the place so you can also retain your customers. Once customers get used to coming to your store, you want them to know you aren`t going anywhere. Being in the same neighborhood, with the same parking, and same business hours, keeps our customers coming back because it`s going to be part of their "routine".

Purchasing a building for a business can keep real estate expense lower over time, and it can provide an additional asset for the business owners to sell down the road. For small business and its owners, the decision of whether to buy or lease is simply a matter of Return on Investment (ROI). If the business can achieve a higher ROI by reinvesting in the business rather than purchasing a property, then leasing may be the best investment?

But, in ownership of real estate, you get money from both the operation of the property (like your business use and perhaps lease income considered as a dividend) and a second time when you sell it, and it's value has increased due to increasing lease demand (known as "capital appreciation"). This is in contrast to most other investments such as benefiting only from writing off lease payments, precious metals and non-dividend paying stocks, in which you only get paid once based on appreciation of the value of the asset. Or, if your landlord agreed to a less than area lease for your space. For example, if you buy an ounce of gold, you don't get a penny in dividends. The only thing you get is the difference between what you bought the gold for and what you sell it for. The same is true for most stocks. Clearly, the best of all worlds is to get consistent income while you own it, and then a large distribution when you sell it.

As well, should you move from the property you own and NNN leased it to a good tenant that wish to purchase the property with a low down (10%) payment that want you to carry the mortgage note for short or long term financing, you could make a great return but if the tenant/buyer defaults on the payments, you could take back the property and resell it again. you keep the down payment.

When you just lease a property, it`s easier to put off buying good furniture because the space is not yours. So you`ll likely settle for cheap furniture that you don`t really want. However, if you own the property, you will be inspired to beautify your place and won`t feel bad investing in quality furniture that will aesthetically match your style and the space. And, you can easily get financing to outfit and remodel the interior. Click Here

If you want to establish your brand and build an empire, it`s best to purchase your own property for your business. When you own the property, you won`t have to deal with landlords who want to hold more power and control over your business. Also, people will know your brand more based on your space and location.

Accordingly, it`s better to own the property if your location is in an area where you think land values will continue to increase. If you own a property in this area, you`ll get the benefit of this appreciation if you ever sell. But if you rent it, it`s likely the rent will continue increase significantly when the land value increases.

Some business owners think that if you own a property, you won`t have the flexibility to move when you wish to. Truth of the matter is, owning a property actually provides you with more flexibility because you won`t be tied to a fixed-term contract. You can choose to sell the property or lease it out if ever you decide to move to another location. The lease revenue can either go towards mortgage payment on the building or to pay the lease on the space you moved into if you are not buying the property?

If you think you need to invest heavily in a building and make significant improvements to run your business, it makes more sense to buy a property instead of leasing one. Most landlords will not spend to improve the building according to your needs. The renovation is usually at your own expense which you lease behind when you move. Obviously, it`s best to spend for the renovation of a building that you own.

There are two reasons why owning your business property makes it easier for you to plan for the future. First, it`s easier to have long-term plans because you know your monthly mortgage costs, which can greatly affect your financials. Second, you will have more time to conquer the market because you know you can stay in the same place longer.

If you buy a commercial property through a real estate mortgage, you`ll enjoy the benefit of building your business credit while owning an asset at the same time. Both business credit and business asset will be useful when you`ll need to take a business loan in the future to finance your business`s growth and expansion.

Most real estate investments include the potential for leverage in the form of a mortgage. This allows the borrower to create an even higher return, without taking excessive risk. If you buy a property and put down 15%, and borrow the remaining 85%, you will increase the yield on your investment hugely, assuming that the yield of the entire property (what you would normally be paying on a lease plus any lease income from the property) is higher than the interest rate of the mortgage. This ability to utilize intelligent leverage has long been an attraction. It allows you to pay off the property using the property's own income.

Having the right financing is critical to the success of your investment goals. Click Here


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