I am Buying A Business: Should I Buy The Property As Well?


Buying A Business Commercial Real Estate

When buying a business you may also have the option to buy the building it occupies.

Like everything else, there are advantages and disadvantages to owning commercial property.

In order to determine whether or not you should buy the property that comes with a business purchase, here are a few questions to ask yourself:

Can I afford it?`

Buying a business is a big financial undertaking. To add the property into the purchase price of the business you want to buy would mean increased expenses across the board. You’ll have higher monthly commitments, you’ll probably have different insurance requirements and you will be responsible for all the maintenance and up keep. All of these things cost money so if you are already stretching your finances to the max to buy the business itself, perhaps it isn’t the right time to buy the property as well. You may be able to negotiate a rent to own deal with the owner. Also consider telling the owner about your interest in buying the property but ask to re-visit the option down the road once you get settled and making a profit from the business you bought.

How will it benefit me and/or the business?

Just because you won’t be paying rent to someone else doesn’t necessarily mean buying a business and its property is the right choice. Ask yourself how owning the building will help you or your company. Will it help you to expand in the future? Will owning the building provide another source of revenue for you through rental income? After asking yourself questions like this you may find that it doesn’t even make sense to buy the building.

Do I NEED to own the building?

Some businesses need to drastically alter their commercial space to accommodate the company’s needs. Some landlords frown upon drastic makeovers because in the event that the tenant leaves that space probably won’t be attractive to every potential renter if it is highly customized to a specific type of business. At that point, the landlord would have to re-do the space in order to rent it. As a result, some landlords may charge you a higher rent to allow this.

If your business is one that needs to make drastic changes to the space it occupies then owning the property your business occupies may make sense. Now if you are buying a business that currently rents and has made changes to the space, you might use this as a bargaining tool with the landlord.

Am I ready to be a landlord too?

As I mentioned earlier, one potential benefit to buying the commercial space your business is in is that you may be able to generate rental income if the building has other tenants. The downside to this is that in addition to being a business owner, you now become a landlord too. You have to ask yourself if you are ready to be a landlord and take on the responsibilities that come along with that role. While more revenue may be coming in, rest assured it will going right back out at some point for repairs and other maintenance issues.

When buying a business, buying the property too is not always the best way to go. You have to take into consideration your financial situation, your motivation behind buying the building and whether or not you are ready to take on the challenges of owning commercial space.

Peter Siegel, MBAAbout This Author: Peter Siegel, MBA (Business Purchase Financing Expert, ProBuy & ProSell Program Advisor) at BizBen (started in 1994, 8000+ California businesses for sale, 500 new & refreshed postings/posts daily) working with business buyers, business owners/sellers, brokers, agents, investors, & advisors). Phone him at 925-785-3118 to discuss strategies regarding buying, selling, (or financing a puchase of) California small to mid-sized businesses.

Categories: Buying A Business


Comments Regarding This Blog Post


One of the greatest benefits of owning the land is no landlord or lease. I remember when I owned my own business and the landlord always raised my rent, and so I felt I never really had any security. One time the landlord made me relocate to the end of the shopping center, which ultimately was a financial disaster, because my business dropped by approximately 50%.

One of the greatest benefits is that when you own the land and the business is that when you do eventually sell the business you can be a landlord to someone else. One of the things to remember is that you only pay for the property if you can afford the payment through the income of the business, but there is small business loans available too. Owning the property is a tremendous benefit and should be desired.






  Helpful Resources To Assist In Selling And Buying California Businesses
Elizabeth McGovern: Escrow Services - San Francisco Bay Area

McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.

Diane Boudreau-Tschetter: Escrow & Bulk Sale Services - CA

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Brad Steinberg, Business Broker: Laundromat Specialist

PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.

Janet Carrera: Escrow & Bulk Sale Service - SF Bay Area

Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.

Shalonda Chappel: Escrow & Bulk Sale Services - Southern California

Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.

William F. Ziprick, Attorney: Legal Services For Buyers And Sellers

Through creative problem solving, attention to detail, accessibility, & understanding that unnecessary delay is often a deal killer, I work closely with my clients and other professionals to consistently achieve a high rate of closings. Office: 909-255-8353, Cell: 509-951-7230.

Helen Yoo, New Century Escrow - Escrow Services In Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.


  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
Buying A Small Business That Is Not For Sale - Strategies For Business Buyer

Approaching business owners directly to see if they want to sell can sometimes work well for business buyers searching to buy a business. Another way is to broadcast your search criteria via the BizBen ProBuy Program to all brokers, agents, and intermediaries who sell businesses in California.

What Should I Do If Other Buyers Are Trying To Buy The Same Business As Me?

Buying a small business is hard enough when there is no competition, so how might a buyer navigate the process when there is additional competition from other buyers? Potential small business buyers are offered a few key ways that a buyer can beat out other potential business buyers in this article.

Should I Buy A Business That is Losing Money? Feedback From Top Advisors

Are businesses worth taking a look at when they are losing money? Multiple Advisors & Business Brokers weigh in on this topic and say yes! (but be careful) on a BizBen Discussion. Some great feedback on this topic will make potential business buyers (and money losing sellers) want to read this info!

Before Buying A California Business, 10 Questions You Should Ask Yourself

Before buying a business, all serious business buyers should ask themselves some key questions about possible buying a small California business, franchise, or opportunity - from Peter Siegel, MBA (Business Purchase Financing Expert, ProBuy & ProSell Program Advisor with BizBen) at 925-785-3118.

What Is The Typical Business Broker Fee For Sellers And Buyers? Who Pays It?

Was just asked the question from a business owner what the "typical commission" amount is for a broker or agent and if upfront fees are common? Thought this might be a great Discussion topic on BizBen for both business owner/sellers and potentially for business buyers (buyer representation).

How Do I Navigate Through The Negotiation Process When Buying A Business?

Negotiating the terms of a business deal is a delicate process, where one wrong move can cost you the business that you wanted to purchase. Peter Siegel, MBA (BizBen ProBuy Program) discusses the ins and outs of negotiations, and how to work well with the seller to get a deal done.

Confidentiality: Why Keeping A Deal Quiet Is Important To Sellers And Buyers

Owners should keep the fact that they want to sell their small business confidential. Before releasing information to prospective buyers, buyers should commit to confidentiality in writing & should understand why it is important. Peter Siegel, MBA a ProBuy and ProSell Advisor with BizBen explains.

Financing Advice: Showing Add Backs To Get Business Acquisition Financing

When seeking business acquisition financing, it helps to review a seller's addbacks as a source of funding to service the debt service. But explain them correctly. Peter Siegel, MBA business acquisition financing expert and advisor at 925-785-3118 covers this topic on financing a business purchase.


Escrow Services Diane Boudreau-Tschetter
Chuck Post Laundromat Industry Expert
SF Bay Area Business Broker Manjit Singh
Julieanna Wakileh Preschool Broker
Facebook
Twitter
Linkedin
Vlogs and Podcasts
BizBen ProSell Program
BizBen ProBuy Program
Business For Sale California Stats
California Educational Events Buying And Selling Businesses
Instant Email Alerts On BizBen

BizBen - Where California Deals Get Done! 888-212-4747
7172 Regional Street #364 · Dublin, CA. 94568
BizBen · Copyright © 1994 - 2020, All Rights Reserved



Clost Login


Please confirm your registration by clicking the link we've sent to .

If you can't see it, please check your junk mail folder.

If you have any problems registering, or need assistance with your new BizBen User Account please phone BizBen Customer Support at 888-212-4747.



First Name:*
Last Name:*
Email Address:*
Confirm Email:*
Create Password:*
Confirm Password:*
Phone:
(   
 


You Are A:
Individual
 
Intermediary
 

Email Address:
Password:
 

500 New & Refreshed Detailed Postings Daily
Over 2500 Resources Available On BizBen
Since 1994. Where California Deals Get Done!
Buy A Business Or Start From Scratch? 5 Key Differences For Business Buy...
Read More News
Buyer Beware: Does A Company's Culture Effect The Sale Of A Small Busine...
Read More News