Owning Your Own Business Location!!

Are your ready to take the next step in life and one step closer to wealth and prosperity? If you are a small business owner, one of the best investments you can make is owning the building where your business is located. While you are leasing commercial space, you are paying the landlord and gaining no equity. If you buy a property for your business, there are numerous advantages, which you could never get while renting.

Luckily, for buyers, Westchester commercial real estate has not seen the explosion in prices that New York City commercial real estate has and prices are still fairly reasonable and there is room to negotiate. Often, our White Plains based commercial real estate brokers and agents can find a property, where your monthly mortgage and tax payments are actually less than what you are presently paying in rent and there are tremendous tax benefits to owner occupied properties.

At the Burbs, our commercial real estate brokers and agents can help you employ strategies to obtain a property, and have the flexibility to address your specific needs. For example, if you have cash on the sideline and can afford a large down payment, but want ot minimize your monthly payments, we can identify properties, which will not only have enough space to suit your business’s needs, but which have other units, that can be rented for cash flow which can be used to supplement your monthly payments. Some common examples, which are great for small businesses such as professional offices, restaurants, delis, grocery stores or salons, include mixed used properties, where there is commercial space on the first floor and residential units above the first floor. Since rental space in areas like White Plains, Scarsdale, Bronxville, Rye, Hobbs Ferry and other Westchester towns is at a premium, often residential rent can be a significant source of income.  Another strategy is to look for properties, with synergistic existing tenants. For example, professional offices, such as lawyers or accountants, are well served by multiple unit commercial spaces, where one of the spaces if empty, but there are existing tenants, with complementary businesses, such as an insurance brokerage.  The same is true for example, a flower shop, may benefit by having a photographer tenant or D.J., which can lead to cross referrals for weddings.  Our Westchester commercial real estate agents and brokers will take the time to identify a property that meets  your needs.

One of the most frequent questions our Westchester commercial realtors hear, is “How Much Do I need for a Down Payment for a Commercial Property”.  There are a lot of options available and the New York small business administration has a program where you can put down as little as ten percent of the purchase price. However, most commercial banks will want twenty or twenty five percent of the purchase price, as a down payment.

Another common question our commercial realtors at the burbs hear is “What are the benefits to owning a building for my business”. The first obvious benefit of owning your own commercial property is that when using your business funds to pay a mortgage, you  are essentially putting the money back into your own pocket, whereas when you pay rent, you are throwing the money away. Consider the following example, if you are presently paying, $5,000 per month in rent, that is $60,000 a year. If you paid that same $60,000  for twenty years, that is 1.2 million, a large part of which would be applied towards reducing the mortgage principal on your property and all the while, you can take tax deductions for the mortgage interest, real estate taxes and depreciation of the value of the commercial property.  One common retirement strategy is to work for a number of years, pay down the mortgage, then sell the underlying business, but keep the property. Then whoever takes over your business can pay you rent, which can be used to supplement your retirement income, or you can sell the property, and purchase a purely income producing property such as a multi-family or strip mall.

Another benefit with owning your own commercial property is that you will have more control over your expenses. The usual commercial lease includes rent increases, often 3 percent annually, year after year, and then substantial increases once the lease comes up for renewal.  However, the most common commercial mortgage used by small business owners is the five year loan, where the loan is paid on a twenty year term, but is paid for five years, at which point it is refinanced. As a practical matter, that means, you are paying down five years of principal (on a twenty year term), and every five years, the principal amount goes down, so if the interest rate remains constant or lowers, your payment actually goes down. Even if the interest rate goes up,  it will typically not go up three percent per year, so your cost escalation is still less than had you rented. Also, even if there is a significant rate increase, you can switch to an interest only option for a few years, which gives you a more flexible monthly payment.

If you own an existing business and are looking to purchase a commercial property, our Westchester commercial realtors at the Burbs can help you find the perfect property in Yonkers, White Plains, Greenburgh, Rye, Port Chester, Mount Vernon, Rye, Pelham, Ossining, Elmsford, Bronxville, Hartsdale, Scarsdale or New Rochelle.