Buying or renting, is the question many business people ask themselves around the 1st of the month, when comes the time to write their rent check.
Commercial real estate isn’t for the traditional real estate investor and it’s a specific niche that can take time learning. Although the ins and outs of this business can be complicated at first, it is something that can pay off (like all real estate investments) if the proper time, money, and research are put into it.
Owning Commercial Real Estate Advantages.
Choices: As the owner, you can decide whether to select a building that matches your current needs, as enough room for future expansion or maybe it is large enough for you to lease parts of it.
Equity: Every month, your payments are applied to paying down your mortgage and building some equity which could be useful eventually to secure a loan for new equipment, to finance an acquisition or simply as an asset.
Appreciation: Notwithstanding any unforeseen occurrences, your building should appreciate it with time. This appreciation could, just as the above-mentioned equity, be used to get better financing conditions.
Power: As the landlord, you are the person in charge of deciding how to finance the building, picking the tenants, choosing the decorations, selecting entrepreneurs for the work to be done, improving the building. You even have control over your rent rate.
If it’s so great, why doesn’t everyone do it?
You can buy commercial real estate with no money down, especially if it’s because your money is bringing you more in another (safe) investment.
On the other hand, if it’s because your cash flow doesn’t allow you any flexibility and that you don’t have anything aside should things go a little unexpectedly, then you may want to seriously consider all the ramifications of the deal you are considering.
What You Should Remember.
So we looked briefly at the different aspects of buying a commercial property. Remember the advantages of being a landlord are:
- Make sure you carefully evaluate your future cash flow.
- Purchasing the property won’t hinder your growth strategy.
- You can afford unexpected and sometimes quite expensive repairs should they be needed.
- You can afford the cash down.
- Get advice from a professional financial advisor about your tax situation.
- Get advice from a professional law adviser.
- Get advice from a professional real estate advisor.
- Avoid free advice as it often ends up being the most expensive kind.
- Evaluate the building’s cash flow.
- Make sure the purchase makes sense even without appreciation.
- Find a reputable real estate specialist.