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Once your business reaches a certain point, it may be time to make a decision to move from a temporary location into a more permanent set up. Additionally, certain financial and logistic factors might make owning your own facility a better choice. Whether you are just starting out with a brand new business or if this is one of many endeavors you’ve invested in, making the decision between renting and buying a building is something that must be taken seriously.
Here are a few important factors to consider before making your choice.
First, make sure that you understand the market in the area you’re considering buying into. Start by asking yourself some questions:
Look closely at the available data. Speak to others who can provide you with information about the area from the past 10 years. This will show you how the area’s grown and help you understand what you can expect as a business owner. While looking for answers to these and other questions, good sources of information for your research can include:
Researching the commercial real estate market in your chosen area has many factors, but it’s worth it to make sure that investing in a building for the long term is the right choice, versus the potential freedom and flexibility of renting on a shorter lease.
When you are considering buying of a commercial building, having enough capital saved for a down payment, as well as a reserve for monthly mortgage payments, taxes, insurance, and maintenance is necessary. If you do not have enough cash to purchase the building, or if the total of the down payment and closing costs would be too much for your business currently, the decision to purchase a building should be put on hold until the business is in a better financial situation.
It doesn’t matter what type of building you purchase, it will come with monthly, yearly and surprise expenses. Considering the operating expenses of your business needs to play a large part in your property search and decision . Here are a few things to consider in your budgeting:
Some of these costs, such as taxes and utility costs, can be estimated by asking the previous owner or your real estate agent. If you are used to renting, you might not have all of these items in your current operating budget. Don’t forget to add these expenses into your monthly costs when budgeting for your new building.
Unexpected repairs are often a problem that occurs once the property is already purchased. You may believe that you can make repairs yourself. However, maintaining a commercial building in a four season city like Milwaukee or Madison takes a certain level of expertise. You may need to hire extra staff or contract with a maintenance company.
It’s also important to consider the types of repairs that are necessary in the building as you consider your options. For example, replacing a roof on a building with a crumbling foundation will not provide a return on investment. It may be more cost effective to purchase a building in better shape then spending money on repairs. Partnering with an experienced commercial building inspector early in your search is recommended.
If you do purchase a building that requires many repairs, or experiences unexpected damage, having the right company on your side is necessary. Remember, as the building owner, you are now responsible for handling anything that may happen. There is no more calling the landlord to clean up after an unexpected flood, electrical fire, or messy mountain of Wisconsin winter storm damage. At A&J Property Restoration, we have a team that specializes in restoring commercial properties around the Madison and Milwaukee areas.
If your building suffers from water damage, fire damage, mold remediation, or other restoration needs, A&J Property Restoration can handle the job and get your business back up and running as quickly as possible. We know you cannot afford to have downtime, and we make your business our priority.
Visit our website for more information on how we can help you with your property management needs and commercial building repairs, and call us today to schedule your estimate.