If you currently lease your business space, you may want to consider owning commercial property. The decision to explore ownership has many variables to consider:
• Can you afford to purchase a building having a 20 to 30 percent down payment? Does your income allow for the payment of a loan payment plus the operating costs of a building?
• Do you expect your space needs to remain the same in the next five years, or do you expect your needs to grow or shrink?
• Are there buildings available in locations that you would want to move your office?
• Is your current lease expiring so you must decide whether to extend your current lease, look for other space to lease or look for a building to purchase that meets your immediate and future needs for the next five years?
If you are an investor that wants to diversify your investments into real estate, commercial property may be a perfect fit.
If you decide to use real estate as an investment you may choose to be your own property manager, or hire a management firm. If you choose to manage, you would be responsible for collecting the rent, paying bills and taking care of maintenance items. A perfect candidate is someone handy with repairs and looking for property that not only provides income at retirement, but also provides busy work during retirement eliminating boredom. These properties usually have higher turnover of tenants—like apartments—and require more hands-on management by the owner.
An alternative to managing your own property, or hiring a management firm, is become a passive investor and simply receive monthly rent payments. This type of lease is often referred to as a triple net lease or absolute lease, where the tenant pays all costs associated with the building. These leases are typically national tenants, including franchises. Because of the lower risks and elimination of management headaches, these leases give a smaller return on the investment.