Building a business is hard enough. Couple that with the economic fallout of the recent health crisis, and reaching business goals seems impossible. Knowing the market will recover, now could be the right time to expand operations with an Owner Occupied Commercial Real Estate loan.
Establishing and growing a business that stands out from the competition is hard enough. Couple that with the economic fallout of the recent health crisis, and the prospect of meeting your business goals has become an uphill battle.
Even with the chips stacked against you, keep in mind the market will recover, meaning now could be the right time to anticipate expanding operations and increasing revenue streams. With an Owner Occupied Commercial Real Estate (OOCRE) loan, you can accomplish both.
If you plan on occupying more than half of a property’s space, you may qualify for owner occupied real estate financing. Owning rather than leasing can be beneficial to your business’ bottom line for many reasons. Here are a few:
- Fixed Interest Rates: At the beginning of 2020 interest rates were historically low. No one knows exactly what rates will do in the coming months, but given the current rate environment it could be beneficial to lock in a fixed rate for an extended period of time. Thus reducing exposure to rate fluctuations as the market recovers.
- Tax Advantages: Owning commercial real estate can provide tax advantages such as expense deductions from mortgage interest and property taxes. Consult with your tax advisor about these deductions before making the decision to buy.
- Control: When a business owns its property, it has the autonomy to make the space fit the operations of their business. Whereas leasing puts the business at the will of the property owner.
- Ability to Grow into the Space: Depending on how much of the space is being used by your business, you may be able to lease out the remaining space for a supplemental income. When the time is right to expand, the choice is yours to use that extra space for your needs.
Putting aside the perks of owner occupied real estate, it’s imperative to determine if this is the right move, especially during these times of instability. Make sure the property suits the business, and take any necessary improvements into consideration. Take note of the location, factoring in things like parking for staff and customers, accessibility to major thoroughfares, and any zoning limitations that directly impact your operations. Also dig into your financials to determine your business’ risk tolerance, and how much equity it’s willing to contribute.
Those are just a few of the questions you need to address, which brings us to the most important step when considering a significant purchase: assembling a team of trusted advisors. These should be individuals who can help make the most educated decision for the business and its future. For instance, commercial brokers can assist with finding properties that fit your needs, within a price range; accountants can determine what the business can afford, and evaluate tax benefits. Bringing in the right legal counsel can also help with negotiations.
Ultimately, you want to find the right lender to not only get your finances in order, but help you get needed access to OOCRE funding. To speak with a FirstBank loan officer for more information, visit efirstbank.com/business or call 1-877-249-9980.