It is making sense isn’t it? Why rent when you can not only buy, but you can depreciate and exempt income as well as create cash flow to you personally. Nothing about that is bad. So you have decided to buy and want to know what to do next. Here you go…
1. Set a budget
Your budget should be where your company is comfortable servicing rent and maitanance on a property all by itself. This is not the time to take the risk. The best thing to do is assess your rental payment and get with you bank to find out what additional amount you can swing. You will now be responsible for taxes, insurance and maitanance on top of rent. If you go at it real smart you will also build in a management fee to cover the costs of handling the property. This is the number we can work within to find you a nice property and as you lease up excess space, that money will offset your mortgage. Win!
2. Location
Many small business owners don’t realize the difference between a 10 minute drive. Location can be everything not only for your business but for the potential of the building. You want tenants that are looking to be in your area right? Buying in desirable parts of town will make a huge difference in lease up time, lease rates and resale values. It takes patience but don’t be wooed by rock bottom space in a bad area, as something will come available in your desired market.
3. Pre-leasing
When I find out about a new building or a space coming to market, I start putting the word out. Do the same as you begin shopping for space. Mention it to your vendors or referral partners that you are looking to buy and will be leasing out excess space. This can not only give you early leads but it will also give you a nice idea of what additional space may be desired. You would be surprised how many small businesses need 4000 sqft or what a shortage of small warehouse space there is. Feel them out and use that study to guide your search.
4. Hire a Commercial Broker
I get a lot of calls from residential realtors looking to pass along a “friend” or lead that they have been working unsuccessfully with to find commercial space. Yes most real estate in online somewhere and you can search for free, but veteran commercial brokers can save you a lot of time and money with their expertise. Most commercial brokers are familiar with areas, lease rates and negatives to avoid. Many brokers can also help with preliminary space layouts and building pro-formas. So rely on experts and save yourself the headache.
The accidental landlord product is perfect for a small business that is making money, has good organization and plans to expand locally. So look into it and feel free to inquire about any of the topics we discuss at writecurt@wkrpindy.com .
-curt
