Advantages to Owning Real Estate for your Business

Owner-occupied commercial properties, defined by a business occupying at least 51% of the space, can also come with more favorable terms, including the amount you can borrow and longer-term fixed rates. For example, SBA loans allow a business to borrow up to 90% of the purchase price.  A lower down payment means your business can preserve cash flow to invest back into the business. 

Even if the business space that you own and occupy is not income-producing, the business still may qualify for the more favorable terms. This holds true whether you are purchasing a building, renovating, or expanding. It can also apply to buying land for constructing your place of business. If your business occupies most of the space, you may qualify for additional benefits.  

The first step is to come into the bank to see what you qualify for, including access to longer-term fixed rates.

Here are some of the advantages for businesses that own their own commercial real estate: 

Stability and Control 

One of the primary benefits of owning commercial real estate is the stability and control it provides to businesses. When your company owns its property, you have the freedom to design and modify the space according to your specific needs. This control extends to making decisions about maintenance, upgrades, and renovations without the need for landlord approval. This level of autonomy allows your business to create a workspace that aligns seamlessly with your operations, fostering productivity. 

Long-term Cost Savings 

While acquiring commercial real estate may involve a significant upfront investment, it often results in long-term cost savings compared to leasing. Monthly lease payments can be a substantial expense for your business, and those costs are subject to increase at the landlord's discretion. On the other hand, owning the property allows you to lock in your business’s mortgage payments, providing financial predictability and stability over the long run. 

Asset Appreciation 

Commercial real estate tends to appreciate over time, making it a valuable asset for businesses. As the property value increases, so does the overall net worth of the business. This appreciation can be leveraged for future expansions, refinancing, or even as collateral for loans. Additionally, your property's value appreciation can serve as a hedge against inflation, providing a safeguard for your business against economic uncertainties. 

Tax Advantages 

Business owners may enjoy various tax benefits when they own commercial real estate. Mortgage interest, property taxes, and certain operating expenses are often tax-deductible, reducing the overall tax liability for the business. Additionally, businesses may be eligible for depreciation deductions, further enhancing their financial advantages. 

Customization and Branding 

Owning commercial real estate allows you to customize the property to align with your business’s brand identity. This level of customization can include exterior design, signage, and interior layouts, creating a unique and recognizable space that reinforces your brand image. This branding advantage can contribute to increased customer loyalty and visibility within the community. 

Equity Building 

Purchasing commercial real estate allows your business to build equity over time. As mortgage payments are made, your business gains a greater ownership stake in the property. This equity can be leveraged for various purposes, such as obtaining additional financing for business expansion or improvements. 

Owning Your Future 

Owning commercial real estate can be a strategic move that contributes significantly to your company's success and financial well-being. As you evaluate your long-term business strategies, the advantages of ownership in commercial real estate should be carefully considered as part of a comprehensive business plan. 

SBA programs are extremely beneficial when looking at purchasing owner-occupied commercial real estate. First Fed will help you consider all your options to find the best scenario for your business and your business’s financial goals.

The first step is to meet with a commercial banker to discuss your business’s options, and how much you may qualify for.

To set up a free consultation, fill out the form below.