Should a Company Own its Own Building? 

Here’s How to Determine When It Makes Sense

Lease versus own. The question of paying rent stumps many executives. Here are the major factors to consider.

Most entrepreneurs live, work, eat, and sleep their companies. How to operate more efficiently and profitably, improve customer experiences, and grow sustainably are frequent sources of inspiration and agitation. Usually, cutting costs while increasing equity represents a formula for success and wealth creation. Entrepreneurs often excel in finding ways of doing this within their main business. And indeed, conventional methods of wealth creation are critical! But many unwittingly ignore an opportunity – they never consider purchasing their commercial properties.

YPO member Chris Hurn has made it his business to help small business owners generate wealth. He is the founder and CEO of Fountainhead Commercial Capital, a financing company that helps small businesses purchase commercial realty. He even wrote a book on how businesses owners can create more wealth for themselves outside of their business.

It’s likely you’ve never considered this opportunity, so here is Hurn’s advice on how entrepreneurs should think about commercial real estate:

1. Stop Making Your Landlord Rich

Hurn hates waste. That’s why he’s so adamant that business owners should stop paying rent. Hurn helps business owners purchase property with the Small Business Administration’s 504 loan program, which Hurn calls an “unmatched way for business owners to improve their balance sheet while likely increasing their personal fortune.” After all, he asks, “Month after month, why hand over your hard-earned money to someone else?”Smart entrepreneurs are always looking to maximize opportunities and minimize inefficiencies – there’s no better place to start than your rent.

2. It’s More Affordable Than You Think

There’s often an assumption that owning commercial real estate is unattainably expensive. But Hurn encourages business owners to examine the numbers more carefully. “While leasing a property has its advantages, including a lower initial cash outlay and tax deductions for the lease, business owners who lease forgo the value of appreciation and equity growth.”He goes on to explain, “With 504 loans, borrowers pay fixed interest rates on fixed assets with longer terms. Doing so helps owners of small and midsized businesses hold on to more of their cash while also creating additional wealth.” Don’t dismiss an opportunity just because of your preconceiving notions.

3. Make It a Business Platform

Owning the property opens up a world of opportunity for a small business owner. Hurn says, “Building owners enjoy the full economic and physical use of the property.” He explains, “Of course they can lease out portions of the property to offset costs, but there’s so much more that can be accomplished with property.” Hurn raves about the marketing opportunities in particular. “They can change the appearance of the property for marketing campaigns, to wow potential recruits, or even to better engage employees,” he says. Business owners can gain a real advantage if they’re able to take full advantage of their physical space.

4. Think About the Long Term

Think about the cost of your monthly lease, and multiply it by the number of years you plan to be in business. That’s a huge amount of money, and you’re just giving it away without getting anything back. Hurn says, “Once you’ve purchased your commercial property, you reap the benefits of appreciation. Of course, there are no guarantees, but real estate is often a great long-term investment.” And the earlier your business starts creating this wealth, the better. Hurn explains, “Rent is never going to go down, so lock in costs now. When you purchase your commercial property for your business, you can lock in your monthly loan payment for years, even decades.” You should consider giving your business this benefit as early as possible.

5. Bet on Yourself

Hurn is a businessman, too, and he knows all too well the pitfalls of entrepreneurship. Property ownership, he says, is a way to balance some of the risk and to enjoy some of the benefits. Hurn says, “Earn the rewards of betting on yourself. Entrepreneurs all take incredible risks. Most leave comfortable positions and jump into the pool of economic uncertainty to start a business. They finance a start-up with credit cards, don’t take a salary for months or years, and take-on immense responsibility for their employees and partners. In some ways, buying your commercial property is another risk and another jump in the pool, but it also represents a tremendous way to earn a payoff for taking the leap to become an entrepreneur in the first place.” And remember that property ownership generates wealth for your family and your business. “When you own your building, you are creating wealth – for yourself, your family, and even your partners and employees. It’s another bet on yourself that can lead to a well-funded retirement and another notch on your belt of success,” he explains. And even if your business fails, property usually gains value.

Is this the right option for you?

We can help you decide!

Click HERE  or call us today to schedule an appointment and discuss your options 813-855-5433

Content Credit Thank you to Kevin Daum, Inc. 500 entrepreneur and best selling author 

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