Should you buy commercial real estate for your business?

A few years ago, my commercial real estate firm bought a property to serve as our permanent headquarters. We enjoy building equity and having total control over our space. We also earn extra income by leasing out the other suites.

As a business owner, you may be wondering if you should buy commercial real estate. The following tips will help you decide if buying commercial property is a wise investment for your business.

1. Assess business objectives

Your business goals should drive your real estate decisions. Assess your business plans and projected growth. Companies with unpredictable growth may be better off continuing to lease. Buying property is a long-term investment, and you will want a space that accommodates your employees both now and in the future. 

2. Secure financing

When you examine your business plans, you should also take an honest look at your financial situation. To buy commercial property, you will need to have funds to cover the down payment. This expense may tie up capital that could otherwise be used for the operations of your business. You may also need to take out a loan to buy commercial real estate. Lenders look at your credit score, financial records and projected cash flow. Based on this criteria, would you qualify for a loan?

3. Assemble a winning team

Don’t go it alone! A team of experts can help ensure your real estate investment is a success. The following individuals will provide guidance as your negotiate a purchase contract:

  • Banker

  • Commercial real estate broker

  • Real estate attorney

  • Certified public accountant

4. Evaluate commercial properties

You will want to find a space that matches your real estate needs. Consider the physical condition on the property and how much it would cost to make it viable for your use. You should also evaluate the property’s location and its proximity to your employees and competitors.

5. Determine your exit strategy

The market fluctuates, so you should have an exit strategy in place. Some options available to you include leasing out your space to another business. You could also repurpose the property to make it more attractive to potential tenants or buyers.

I’d love to help you find the perfect space for your business. Contact me at tanner@menlocre.com to discuss your business goals.

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