Reasons to Purchase Commercial Property in 2019

Purchasing property for the business purpose is a great idea, provided you have a clearly defined objective behind it. Investment in the property helps to build equity, make your expenditures a lot more foreseeable and help you gain tax advantages too.

Here are few important reasons to consider investing in commercial real estate:-

For a greater cash flow – Generally, the return on commercial real estate is higher as compared to the residential properties. This is particularly correct if you choose to lease or rent a multi-unit commercial property. Higher is the number of tenant, more will be the income generated. Also, the commercial properties with apt location can expect a better annual return. Since the commercial estate leases are way longer, therefore, expecting cash flow stability is obvious.

Commercial Real Estate Image

Risk involved is lower- There is a lesser chance to lose out on the rental income if you own a commercial property and lease it out to the multiple tenants. Even if you lose one tenant, there are other tenants who can support you with the income generation. The landlord-tenant relationship includes two businesses rather than the two individuals. Thus, it is more of a business-to-business client association.

You can have complete control over the property- Though you can sign a long term lease for most of the spaces to set costs, you cannot control the several other external factors. While, if you own a building and need extra income, you may even rent a significant part of it. You may lower the number of tenants in case you require more space. This flexibility is not available when you lease.  The landlords can sell off the property to the other owners who might have distinct goals.

Favorable tax treatment is possible- You can secure tax benefits too by purchasing commercial property. The interest amount and some non-mortgage expenses would be removed from your return. Thus, resulting in favorable treatment with respect to the taxes.

What Should You Do Before Investing in Property?

When you decide to invest in a property, you need to do your research to determine whether the property is a smart purchase or not. You may do so by considering the following:-

  • The vacancy rates of the current owners
  • Current financial position of the tenants
  • Preference of the tenants
  • Construction of the residential properties built in proximity

If all these basics of the property are in place then investing in commercial real estate may certainly be a right financial step.

If you wish to avail loan for purchase of commercial property, you must necessarily look only for the reliable loan service providers.

How To Choose Which Property is Right For Your Business?

For selecting the appropriate property, you must check for these factors:-

Check The Location- This should be the primary concern with respect to the purchase of commercial real estate. The location can make all the difference. Therefore, you must look for the location keeping business concerns in mind.

Property is Right For Your Business image

Inspect The Physical condition- You must carefully inspect the physical environment of the property since there may be the presence of asbestos or lead paint, which are harmful substances.

Be Aware of the Limitations- There may be certain places where it not allowed to make any changes with the property. So, it is important to be familiar regarding the zoning laws of that area.

Look for the flexibility of The Property- It would be better to look for the property which has the scope for further expansion in future, for the commercial reasons.

There are various ways by which the business can benefit from owning commercial property such as:-

  • Purchasing a property is an investment as it’s value enhance with time.
  • It can be utilized for the advertising purposes such as selling billboard or ad space.
  • It can also be used to provide services to the tenants such as parking space, for maintenance services etc.

Commercial Loan Tips for Small Business Owners

With the growth of the business, utilizing a loan can turn to be a great move in the betterment and further progress of the business. This is particularly because every business entity requires to spend more, for more profit. But, managing or availing commercial loan can be quite challenging.

As a lender looks at your application for loan, they pay attention to certain crucial components. It may include a cash flow analysis to check whether your respective company is able to repay the loan, the amount of capital you are investing into the venture, assets guaranteed to secure the loan. The lender may also keep a check of the borrower’s personal commitment to repay the loan. Therefore, you need to be prepared well in advance so that you can enjoy the benefit of loans without any difficulty.

Here are the tips that can help you with availing the commercial loans:-

Commercial Property Purchase Loan

  • Try getting associated with various lenders – It will help to simplify the borrowing process, at the same time, it will make you work together towards your business goals on a regular basis. It definitely makes sense to keep working with the same lender rather than going for the new one and starting the entire procedure again.
  • Apply for a Loan Irrespective of the urgency – Applying for a business loan at a time when there is a shortage of money will not serve the right purpose. Since the Lenders are bothered about you repaying the loan and you might have to pay higher interest rates later on. Therefore, applying for a loan in a weak financial situation should be avoided. Thus, it is better to plan your loans earlier and do not wait for the urgent requirements. Being proactive with decisions such as commercial loan is the right way to go about handling your business.
  • You need to be clear about the different loan options available: In order to make a wise decision with respect to the loans, you must be aware about the different Commercial Property Purchase Loan options available. You can seek the assistance of the professional brokers to have an idea about the same. This would enable you to apply for the loans required by you.
  • Go for a Distinct Business Bank Account: For the purpose of granting you the loan, usually, any lender would require to get into the details of your finances. Therefore, having a separate account and books for your business involving loans becomes important.
  • Creating a corporation: If you wish to get approval for a loan from a small business lender, forming a corporation would be helpful. It would permit your business to build up it’s own financial records. In case of the failure to repay the loan, your home and personal property would be protected. There may be few non-traditional lenders who work with you on a personal level too if in case you possess a sole proprietorship or partnership. It can be an important step towards enhancing your potential for liability issues
  • You Need To Be Aware About The Credit Scores: Knowing the credit score makes the lenders trust you with your financial health and habits. Thus, it increases the chance of you availing the loan from the lenders. You must analyze the scores and check whether it meets the defined requirements.
  • All the Necessary Documentation Should Be Arranged: While applying for loan, you might require to be prepared with the essential documents. So, you need to meticulously review the papers that would be required to avoid any last minute hassles.


    loan for purchase of commercial property

    Getting a loan to manage your business at the right time is hugely beneficial for the successful functioning of any business. Hopefully, the tips mentioned above would provide you the appropriate help with regard to availing loan for purchase of commercial property, which could be used by the business entities.