When it comes to commercial real estate, one of the most common dilemmas you’ll face as a business owner is owning vs renting. This is a decision that can have a big impact on your business and financial situation, so it’s important to weigh the pros and cons carefully. In this blog post, we take a closer look at both options to help you make an informed decision.
Pros of Owning Commercial Real Estate
When you own commercial real estate, you have complete control over the property. You can make any changes or improvements to the building that you wish, without having to get permission from a landlord.
Additionally, when you own a property, you have the potential to build equity over time. This can help you build wealth and provide you with a valuable asset that can be sold or borrowed against in the future.
Cons of Owning Commercial Real Estate
With ownership also comes responsibility. You’ll be responsible for all repairs and maintenance on the property, which can be costly.
Plus, if your business is in a location that’s experiencing a decline in property values, you may be stuck with a property that’s worth less than you paid for it. Although this is relatively uncommon, it’s a possibility you need to keep in mind.
Pros of Renting Commercial Real Estate
One of the biggest advantages of renting commercial real estate is flexibility, which can be beneficial if your business needs change rapidly.
Depending on the type of lease you sign, your landlord may be responsible for the maintenance and repairs of the property, which can save you a lot of time and money. Finally, when you rent, you don’t have to worry about paying property taxes or dealing with other ownership-related expenses.
Cons of Renting Commercial Real Estate
The main downside of renting commercial real estate is that you don’t have as much control over the property.
You may be limited in the changes or renovations you can make, and you’ll have to get approval from the landlord for anything you do.
Another factor to consider is that if your landlord decides to sell the property or go out of business, you could be forced to find a new location.
Wrapping It Up
At the end of the day, owning commercial real estate gives you greater control over the present and future of your business. If you are committed to your business and have a clear path for expansion in the short to medium term, then purchasing real estate may be the option that makes the most sense.
Your Options for Purchasing Commercial Real Estate
If you have decided that you need to buy commercial real estate, the next step is to find a financing solution.
The good news is that at Gellyfish Commercial we have plenty of alternatives to help you get the capital you need to purchase commercial real estate.
1. SBA 7(a) Loans
SBA loans are loans that feature longer repayment terms and more competitive rates than other alternatives because they are partially guaranteed by the Small Business Administration (SBA).
7(a) loans are the most popular SBA lending program. And although this loans are typically used for things like working capital or refinancing business debt, they can be a good option for business owners who need to purchase commercial real estate they already occupy.
2. SBA 504 Loans
While 7(a) loans are general-purpose commercial loans, 504 loans are specifically geared toward fixed assets such as new facilities, existing buildings/land, or equipment.
3. Conventional Loans
Although conventional loans tend to have more stringent requirements than SBA loans, they offer more flexibility. While SBA loans have very precise requirements about how you can use the proceeds of a loan, conventional loans give you more freedom when it comes to deciding how to allocate those resources.
4. Bridge Loans
If you need a quick solution to fund a purchase of commercial real estate, bridge loans are for you.
Bridge loans (also known as swing loans or interim loans) are a short-term financing solution that allows you to get fast access to cash while you secure more permanent funding.
To learn more about bridge loans, read our previous post, “Bridge Loans, the Ultimate Guide.”
Gellyfish: Certainty of Execution in Commercial Loans
At Gellyfish Commercial, we offer commercial real estate financing solutions with the certainty of execution you need to take your business to the next level.
We are located in Riverside, and work with clients all over California and beyond. Contact us today by email (info@gellyfishcommercial.com), telephone (877-800-4493), social media (Facebook, Twitter, LinkedIn), or through the live chat on our home page to schedule a free consultation.
