Buying a property for your business? Here’s what to consider

Do you feel your current property is limiting your business’ potential? Whether it’s rising rents, the need for more room to grow or the desire to open a new office in a prime location, the time might be right for an upgrade.

Whatever your need, buying a commercial real estate property for your business is a big investment. Doing your due diligence and planning ahead can help set you up for success. Our commercial real estate lenders recommend a few factors to consider once you decide you’re ready to buy a property:

Evaluate the benefits for your business.

It’s helpful to consider what benefits purchasing a building will unlock for your business. This could include:

• Control: When you buy a building, you are in the driver’s seat. You can decide the structure, layout and timing of capital improvements. You can decide how quickly you need to make building repairs based on the level of urgency as well as what level of finishes and quality you would like for the repairs. This control can allow you to better plan for the needs of your business.
• Consistency: Purchasing a property allows you to set a more consistent monthly budget. When you rent, you could incur rent increases or need to sign new leases that could increase your fixed costs.
• Investment: When you own a building, it becomes an asset you could potentially sell later. The building could be a considerable asset for your business over time.

Build a team of experts.

The good news is that you don’t have to tackle this big investment by yourself. As soon as you are interested in looking at properties, you can assemble a team of experts to support you along the way. This could include:

• Commercial real estate broker: Look for someone with expertise in your area and extensive experience in commercial real estate.
• Commercial real estate attorney: Although not always necessary, it can be helpful to have an attorney who can support you with any title or deed issues and/or negotiations.
• Commercial real estate lender: You may need financing to support the purchase of the building. Find a banker you trust who not only understands your business but also understands the commercial real estate landscape in your area.

Assess the capabilities of the property.

Before you begin your search, it can be helpful to plan what you’ll want in a space. Creating a list of desired features will help you narrow your options and find a space that fits your needs. Once you identify a property you want to look at, we recommend checking on:

• Zoning: Is it appropriate for what you need from the building?
• Utilities: Do you have access to the utilities you’ll need for your operation?
• Location: Will this location work for your clients and/or employees?
• Municipality requirements: Are there any restrictions from the municipality that could impact your needs?
• Deed restrictions: Can this property be used for what you intend?

Prepare for potential challenges.

Any time you are making a large purchase for your business, it’s important to prepare for any potential roadblocks. When buying a property, there are some common challenges we see business owners face that can easily be remedied by proper planning.

• Don’t buy too early: This is a large investment in your business. It’s okay to rent for some time while you iron out the operations and cash flow for your business. You do not have to purchase a property right away, and often, waiting can help you better identify the ideal property for your operation.
• Don’t fit a square peg into a round hole: A good price may not be a good value for your situation. You want a building that fits your needs. Maybe the layout isn’t correct, or the location isn’t ideal. Listen to your instincts – finding the right space is most important.
• Don’t overspend: You will want to understand the finances of your business before purchasing a property. If you overextend, you could put the business in financial trouble.

With the right strategy in place, investing in a property for your business can be a powerful step toward long-term growth and success. At Park National Bank, we have the capacity and strength to fund your success. Our team is ready to customize financing to fit your needs with various options and programs. Connect with a lender today to discuss your custom solutions.

Watch our video to hear from one customer about how we helped her purchase a new building and increase the size of her operation.