Office – Warehouse Condo – Today’s Property Type Small Business Owners Choice
Today, more and more small business owners, including accountants, doctors, and lawyers, are taking advantage of great mortgage programs and low interest rates on commercial real estate. Commercial real estate has far outpaced the appreciation of residential real estate and has put commercial real estate owners on the fast track to building wealth. Commercial real estate has proven over the years to have one of the best returns on investment.
The benefits of buying versus renting typically outweigh renting. When comparing the cost of renting versus buying commercial property, it’s not uncommon for your mortgage payment to be significantly lower, even with taxes and insurance included. As a property owner, you can now pay rent to yourself versus the landlord and invest in appreciating assets that will build equity and provide numerous tax advantages that rent does not.
Many buyers of these commercial condominiums don’t just buy one, they buy two units, and most commonly, the adjoining unit. That way they can occupy one unit and rent the other, and in some cases, the rental payments are more than enough to cover the costs of both commercial condominium units. The other thought process behind buying units is also for business owners who feel they will need to expand in a few years so they can buy the space needed and receive rental income until the business has grown to the point where you need to occupy both. units.
Office/warehouse condos make the cost of owning commercial real estate affordable for small business owners, especially if you can get in during the pre-construction stage. There are numerous advantages to buying a commercial condominium, such as adequate parking for your staff and clients, building security and maintenance, and most importantly, they are typically located in prime locations, for example: Doctors can find an office condominium nearby hospitals and lawyers can find locations near the court.
Most business owners avoid buying commercial real estate because they assume they will have to make a large down payment and don’t want to part with this money, preferring to remain liquid. But for commercial condos, there are loan programs that don’t require the big 30-50% down payment; instead, there are loan programs that allow only a 10% down payment. Now, it’s also important to note that we use Loan-at-Cost versus Loan-to-Value and include things like construction and other costs in the purchase price. These programs will help minimize the use of a company’s cash reserves.
It is important to work with a commercial loan specialist because as a business owner, your time is precious. Therefore, using a residential mortgage broker to arrange commercial real estate financing will not only slow down the loan process, but will likely cost you inexperience, the best loan programs, and fees.