- Appreciating value- Though there is no guarantee that property will appreciate in value, traditionally, real estate has been a rock solid investment. Owning the property that houses your business also makes it easier to sell the operation if that right offer ever comes along. Most business owners never consider that owning their building could someday be their gateway to the dream life of living on an island, sharing frozen drinks and lies with the locals, only worrying about breaking your flip flop by stepping on a pop top.
- Cost stabilization- Rents increase. It is almost as sure of a bet as George St. Pierre throttling me in a mixed martial arts match (Bring it George… I hope he doesn’t read dumb business blogs). Owning your own building also provides expense stability and allows for more accurate cost forecasting.
- Flexible decision making regarding use- Landlords often have very strict rules regarding how their property can be used. When you own the property, you can choose whether or not you want that live Asian elephant wearing a pink tutu as the shop mascot. Throw it a peanut and give rides to the employees. You own the building.
- Extra Income- Remember, that the 504 loan (Real Estate Advantage) only requires that you occupy 51% of the property. The rest can be rented to another business that is not quite ready to follow your ownership example. More income equates to equity, which for some, can equate to sponge caked, sun baked, unknown tattooed good times in the islands.
Here are some questions to ask once you have decided that ownership is right for you.
- Is there room for your business to grow? What if, in the future, you need two elephants?
- Are there any zoning limitations? It does not matter if the building is large enough to house five elephants in pink tutus, if the zoning does not allow it, you are out of luck.
- How is the location? The location not only affects the property’s value now, but affects it in the future. Choosing an up and coming location against an established location could add so much to the investment equation.
- How is the traffic? For some businesses, high traffic areas are desirable, for others, these same areas are negatives. This is an important question to ask no matter what type of business you own.
- How well has the building been maintained? It is not uncommon for sellers to defer maintenance on buildings, especially if they know they are going to sell in the near future. There is nothing more disappointing than moving into your new corporate digs, getting everything straight and organized and then having a ton of raw sewage back up into your private bathroom. “What’s that smell?” “Sewer backed up.” “Yeah, sure it did.”