Should a Small Business Invest in Real Estate?

This piece was actually inspired by a question we got from one of our videographers! They asked us whether we thought it was a good idea for them to invest in a building where they could have a commercial space for their office, potentially with residential units on top of it.

In short: Is it a good idea for a small business to purchase a property?

The answer is, absolutely. In fact, we will be relocating our offices to a building we recently purchased, while simultaneously developing residential units on top of it and beside it. 

The reason why this is a good idea is because nobody is going to take better care of the space than you will! And if you’re the one occupying the space, you get to actually use your rent payments to pay down the mortgage.

Obviously, there’s interest to pay as well, but it’ll be less than just giving it away in rent. You still get to write it off like you would a regular rent payment, plus you’ll have additional cash flows from the other units.

Now, you obviously have to keep in mind that you will be responsible for tax payments, insurance, and maintenance. More often than not, though, taxes are already being passed on from the landlord to the renters, and the other costs end up being pretty standard.

Aside from the financial benefits, one other reason why owning your space is a great idea is because you’re protected. Recently, a friend of the firm was kicked out of their space because their landlord wanted to increase the rent. He didn’t agree with the increase and therefore ended up being forced out of the building.

If you own your own office, you don’t ever have to worry about finding a new location unless it’s on your terms.

While the right answer is clear, there are many particularities surrounding property ownership as a business: who’s going to manage the building? Should you structure it as a holding company? Reach out to our team to dive deeper into this topic and get some answers!

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