In the same manner that you would ponder about the best way of obtaining a car, is the same approach you should take with your business. The big question is, “Should I buy, or should I lease?” It’s not unusual for business owners to realize that their current space doesn’t fit their specific needs, or face increased rent annually, or for the space to simply lose its original appeal. Whatever it may be, making the decision to buy commercial real estate can significantly impact the growth and success of your Massachusetts business, from funding options to cash flow. If you are on the fence about purchasing your next office space, here’s a look at some top reasons to forge ahead with your purchase.
You build equity in your property when you make your monthly commercial real estate payments because the payment goes directly to reducing the balance of the loan. If you choose to rent, you’d be allowing the building owner to gain equity in the property. Buying your commercial space is a valuable investment in your future. When it comes time to sell the property or refinance, you can leverage the property to gain wealth, extracting the difference between the remainder of the loan amount and the present fair market value of your commercial property.
When you buy a commercial office space, you eliminate having to deal with annual rental increases or putting in requests to modify the office space. You have complete control of the commercial real estate when you purchase and not rent. In general, you’ll have a fixed monthly payment for the length of time you remain in the building. You are the one calling the shots regarding your investment and can make any modifications you see fit.
It may be that your newly purchased commercial building has more square footage than your current business needs require. What can be done with that additional space? One option is to rent out the additional space and earn some extra income. This would mean that you’d also become a landlord and take on all the responsibilities that come with the new role unless you decide to hire a property management company, a move that would minimize your earning potential.
Owning your commercial real estate allows you the opportunity to benefit from asset appreciation, which is the increase of property value with time. An eventual sale of your commercial property will yield capital gains, and an amount equal to the difference between the initial purchase price and the present fair market value. Since purchasing commercial real estate is an investment, it adds diversification. Commercial real estate is an illiquid asset class and has a low correlation with the stock market, where if there is a drop in global equity, it doesn’t really affect your real estate investment.
You should place careful thought into buying your next office space, considering the impact that it could have on your business and the potential for additional earnings. A professional commercial real estate expert, like Quinn & Associates can help to guide you through the process and ensure that you invest wisely. Contact us today to begin discussions around your business’s needs for commercial space!