Buying real estate is not just limited to home buyers and neither are all the good purchase incentives available today. Low interest rates, lowered mortgage insurance requirements and a plethora of new purchase incentives have created a wonderful buying landscape for any type of real estate transaction.
There are some key differences in buying real estate for your business vs buying a new home so today we will discuss three things a small business owner needs to know before buying a new piece of property for the business.
1.) Align the Business Property Purchase to Business Financials
The first tip is to set a clear, realistic price point and align your buying goals to this. Make sure that your goals work for your specific budget and your businesses future growth projections. Keeping goals realistic is the key and even though a buyer may have a good idea of what they want for their businesses future, it is highly recommended that you write it down and refer back to it often. This helps the buyer stay on track and ensure that the goals align with their budget.
2.) Convey Business Buying Goals to Everyone Involved
The second tip is to convey the buyers’ wants/needs to everyone involved in the process. Do not assume that just because you have shared your specific goals and limitations with your lender, that he/she has shared this with others involved. Don’t assume anything and save yourself a massive headache later on by telling everyone; attorneys, real estate agents, accountants, business partners, bankers etc. Keep everyone on the same page and tell them exactly what your plans are with the real estate purchase. Get this out of the way early on.
3.) The Type of Business Structure Matters
The third area that needs addressed is the specific limitations that one may face with the type of business entity they have formed. Most businesses begin with a formal business structure like a LLC, Limited Partnership, S Corporation, C Corporation, or other legal entity. It is important to know that each of the different business structures have different real estate purchasing implications. Certain business structures offer great benefits to the small business property buyer, while others may present deep tax liabilities later on down the road.
The easiest way to approach this issue is to speak with a local real estate attorney. The locality of the attorney is important as well, because state laws can differ dramatically. If you are shopping for a new business location in a new area to you, speak with your buyers agent and they can direct you to the appropriate person.
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