Buying commercial real estate rather than leasing can be a wise decision for your business or for investment purposes, especially in a booming South Florida market. However, you’ll need to be very careful and strategic with your purchase to ensure the highest return.
By assembling the right team, including a South Florida commercial real estate attorney, accountant and other experienced advisors, you will greatly improve your chances of making a good decision. In general, when you are buying commercial real estate you can expect the process to be more complicated than buying a residential property since there are often many more factors to consider.
Consider the location and other risks of buying
When you choose to buy commercial real estate, you should be aware of the fact that the location you choose can end up backfiring quite easily. A great location in South Florida can change over time and become less desirable for your business. Likewise, some locations can become more desirable over time.
Looking at recent trends in property values is a good idea, and also talk to your team of advisors to get their opinion on whether or not your potential commercial real estate purchase is in a good location for your unique goals.
You will be losing some liquidity
By choosing to purchase commercial real estate you will be giving up some liquidity that may otherwise be beneficial for your business at the time of purchase. This liquidity will be used as a down payment and for other expenses involved in your purchase.
Leasing commercial real estate doesn’t require as much upfront liquidity, and you can invest your cash in other aspects of your business. On the other hand, if your business gets into a slump in the future, you can sell your commercial real estate purchase for a quick influx of cash.
You have more control when you buy
When you choose to buy commercial real estate in South Florida, you gain more control over it compared to leasing. For example, if your lease happens to roll over when the market is not favorable, you may end up paying significantly higher rental costs to stay in your current location. This can impact the profitability of your business. Also, when you buy commercial real estate you gain many investment and tax benefits including asset appreciation and tax deductions.
Mark Schecter is a knowledgeable South Florida commercial real estate attorney who can explain all of the benefits of buying a commercial property to you based on your unique situation. Contact Schecter Law today at (954)-779-7009 for more information or for a consultation.