Rent or Buy commercial property for business with potential to lease out office space
I am starting a small business and am considering renting an office with WiFi included, it it has NNN on top of that. I am waiting to hear back how much. The space is under 300 square feet. But I heard that investing in commercial property is a good investment. I also see an office/retail property for sale. What are the benefits to owning the property is part of a building with other units)? Also how does the borrowing work? Is it only for ten years? A newbie so please be patient with me. 😀
[{"id": "gmkxk4n", "text": "By owning a property that has the potential for tenants beside yourself you become the landlord and open a new stream of income. If you buy a property at a good price on n the future you would be able to sell to an investor with a lease in place for your business and inject the profits from the sale into growth or development for your business or a new business venture. These a just a few benefits to owning if the numbers make sense. Leasing a space on a NNN deal is a good option as well. Basically it all comes down to what you can afford and what the goal is for the future.", "replies": [], "depth": 1}, {"id": "gml13a7", "text": "Considering this is a new venture for you I would keep in mind how you want to spend your time also.\n\nAs a Tenant you can spend your time running your business.\n\nAs a Landlord you will have to split your time between your new business and being a property manager. You can hire this out but it is expensive and will deminish the rate of return.\n\nBuying often makes a lot of sense if you can afford it and the local inventory allows it but on a new venture you may want to stabilize the business operations before becoming a landlord also.\n\nJust my 2 cents", "replies": [], "depth": 1}, {"id": "gml19bz", "text": "Also, wifi included and NNN seems contradictory. Make sure you get a breakdown of the operating costs for the lease.", "replies": [{"id": "gmnleiv", "text": "Thanks so much. Yes, they told me the electric and WiFi was included but I saw NNN type so I need to inquire about this as well on the lease office.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gml1b4n", "text": "If you haven't leased a building before, I would wait before investing into a building. You need to focus on your business first, investing into CRE is a secondary goal once the business is stabilized. [https://youtu.be/kzp1J-QuBnA](https://youtu.be/kzp1J-QuBnA)", "replies": [], "depth": 1}, {"id": "gml53in", "text": "I will tell you the same thing I tell my clients: do you want to be in whatever new business you are starting or do you want to be in real estate? Until you grow a real estate portfolio to a point that you can afford third party management, you are buying a job. That real estate job will take away from whatever other job you have. Establish your business, build your profitability, take the tax write off for leasing, and buy something when you have enough spare cash laying around and no need to invest further in your current business venture.", "replies": [], "depth": 1}, {"id": "gml7fuw", "text": "There is a reason why many big companies lease their spaces. Leasing does gives you flexibility both of moving once the contract expires, if your company size or needs have change, and it frees up capital that you can use in your business. So, you should ask yourself, is the money you are investing on it bringing you a revenue equal.or superior than if you were to invest it in your business? Is the risk of a worst case scenario worth it? If your answer is yes to both, go ahead. Also, office spaces are currently having a tought time in the market. Many companies are downsizing their footprint.", "replies": [], "depth": 1}, {"id": "gml9ao5", "text": "I own one of my spaces and lease another. There are advantages and disadvantages to both. Others have covered the advantages.\n\nI learned a big disadvantage this year with covid. We luckily had the resources to keep both locations alive, but further shutdowns would have severely impacted that ability. The leased location gave us more flexibility with closing the business. The landlord may or may not have forgiven the rest of our lease, but we wouldn't have continued to accrue expenses after the term was up. With the building we own, we still have mortgage, taxes, insurance, and other fixed costs. We actually tried to sell or lease part of the building, but with the current condition of commercial real estate in our area there are no takers. So while we have equity in this asset, we can't cash out on it right now.", "replies": [], "depth": 1}, {"id": "gml9ild", "text": "I think you should wait to buy until you see what your needs are.  You don't know how much space you might need 5 years from now.\n\nYou really need to understand NNN.  I always felt screwed on my first lease because I didn't appreciate all of the fees on the triple net.   The NNN were really high (managemt fees, large common areas, etc)", "replies": [], "depth": 1}, {"id": "gmlsjeq", "text": "&gt;I also see an office/retail property for sale. What are the benefits to owning the property is part of a building with other units)? \n\nWill you own all the units, or are you saying you will own one unit with other owners (Condo)\n\nAlso how does the borrowing work? Is it only for ten years? A newbie so please be patient with me. \ud83d\ude00\n\nSo loans terms have 2 components.\n\nThe length of the term (number of years until the contract is over)\nand the Amortization schedule(Speed at which you are paying down principal) https://www.youtube.com/watch?v=d9_Fh1G5h6w", "replies": [{"id": "gmnlswj", "text": "I would own one unit. The others are leased which concerns me since the person owning more than one of the five units really has an advantage.\nI am looking into this for the tax benefits and more as well as a place to start a business. Am I hearing wrong? What are the benefits? Are the commercial loans less time than a standard mortgage? Thanks.", "replies": [{"id": "gmnzw81", "text": "&gt; The length of the term (number of years until the contract is over) and the Amortization schedule(Speed at which you are paying down principal) https://www.youtube.com/watch?v=d9_Fh1G5h6w", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gmqsuhj", "text": "&gt; WiFi included, it it has NNN\n\nWon't Internet be one of the CAM items?", "replies": [], "depth": 1}]