Jun 13, 2023
In my conversation with Dan Lesniak, we explored the underutilized strategy of business owners buying their own buildings.
Many business owners overlook the potential of owner-occupied commercial spaces. Renting a building can drain resources, while owning can offer a multitude of benefits such as tax advantages, leverage, and the potential to lease part of the building to offset costs. Additionally, real estate ownership can significantly boost the value of your business when you decide to sell.
I shared a striking example of a client who is a doctor and decided to buy her own practice's building. When she sold her practice to a larger medical group and retired, she maintained ownership of the building and continues to receive rental income from the group. This provided her with a passive income stream that will last her throughout her retirement, demonstrating the power of commercial real estate ownership.
Moreover, I discussed another case of a client with a roofing business. He purchased a larger warehouse than he needed and leased out the remaining space, effectively having his tenants cover the costs. While most people assume that owning a building requires a hefty down payment, I pointed out that we've sourced deals requiring as low as zero down payment, depending on the business structure.
Business owners considering this route often express concerns about potential cost differences compared to renting. Generally, the payments are comparable or in some casesccan even be less than a rent scenario, with the added advantage that they don't increase over time like typical rent contracts.
I highlighted the frequent issue of entrepreneurs engaging with a few banks and not receiving optimal financial terms, or even finding themselves tied to covenants that can be restrictive.
Finally, we touched upon the considerable tax benefits associated with owning a building, including the ability to depreciate the building to offset income. Additionally, the increasing equity in the property can be leveraged for other investments or to secure financing, contributing to a growing net worth.
The discussion affirmed that the savvy entrepreneurs we typically work with, such as professionals and local business owners, have a lot to gain from owning their business's real estate. From dentists to HVAC companies, these businesses have leveraged real estate ownership to strengthen their financial position and future-proof their operations.
Connect with Dan Lesniak:
Meet the Host: Paul Neal is the founder and Principal Funding Strategist at Vantage Point Commercial Capital, a firm that focuses on helping entrepreneurs, businesses, and real estate investors win by funding their growth and dreams in nontraditional ways.
Paul’s unique perspective has been honed over 30 years as an entrepreneur, financial strategist, professional speaker, and executive coach. He took the road less traveled choosing to leave engineering right out of college to become a serial entrepreneur. From great early successes in the 90s and 2000s, to completely losing his primary business in the Great Recession of 2008, to bouncing back and just recently selling another business for a healthy 7-figure sum…he’s experienced it all. Paul offers a wealth of experience and passion to the entrepreneurial community in an engaging, upbeat, encouraging, and witty way.
Connect with Paul:
Visit his website: https://paulneal.net
Connect with him on LinkedIn: https://www.linkedin.com/in/paul-neal-47b8478
Vantage Point Commercial Capital: https://vpc.capital