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Buying A Building as Business and Retirement Strategy Too Often Overlooked by Small Business Owners

September 10, 2019 | Small Business Loans
buying commercial real estate

Nearly 60 percent of small businesses in the U.S. are owned by baby boomers and, if their total sales (over $5 trillion) are any indication, they appear to be performing quite well.

As baby boomers are getting older, many entrepreneurs in this generation are looking down the road at retirement and how best to benefit from this inevitable milestone in their lives.

Whether you are a baby boomer or early in your entrepreneurial journey, there is plenty to learn about the power of building ownership.

“There’s a tsunami of wealth transfer coming in this country,” said Glenn Arnold, executive director of the San Diego office of Cushman & Wakefield, global real estate services firm.

Several years ago, Arnold discovered an emerging pattern of small business owners in their 60s selling their businesses. He started helping his clients through this complex challenge, particularly those who owned the building in which their business was located. Considerable number-crunching and evaluation often revealed a truth that surprised his clients.

Related: Top 3 Reasons Small Businesses Should Buy a Building


Building Value Often Exceeds Business Value

“Although entrepreneurs invest their heart, soul and personal fortunes in their businesses in anticipation of selling it for a big financial gain, the reality in many cases is that the building they own is worth more than the business itself,” said Arnold. “It points to the value of owning commercial real estate as a long-range strategy for retirement and wealth creation.”

Michael Owen, chief credit officer for CDC Small Business Finance, which provides low, fixed-rate SBA 504 financing to help entrepreneurs who are buying a building, said too many small business owners are so focused on everyday business operations that they miss all the benefits that accrue with building ownership.

“The upside of owning versus renting your business facility is significant,” said Owen. “When you purchase commercial real estate, you build equity in an appreciating asset, stabilize your costs to help your business grow, enjoy tax benefits, create borrowing leverage. Plus, you’re investing in something that will help fund your retirement.”


Buying A Building Creates Equity, More Secure Future

Chris Curan Waterstone Faucets

Chris Kuran, President of Waterstone Faucets, has found tremendous value in building ownership.

“No matter where you are in the life of your small business, owning will pay dividends, just like it does when you buy a home. Every dollar you spend on a mortgage is an investment in your future prosperity.”

Chris Kuran, owner of Waterstone Faucets, one of the largest manufacturers of high-end kitchen faucets, bought his 42,000 square-foot production facility in 2014 after growing weary of paying rent.

“You look at rent as an expense, but as an owner, you look at the building as an asset that will continue to appreciate,” said Kuran. “The opportunity to buy your own building is huge. It’s probably one of the best decisions you can make as an entrepreneur.”

Watch: Waterstone Faucets – Why Buy a Building:

 

Small business owners considering buying a building will immediately be faced with how to finance the transaction. The SBA 504 loan is designed specifically for commercial real estate purchases and features a 10% down payment, a below-market fixed rate ( 3.35%, September 2019) and term options of 10, 20 or 25 years. Small business entrepreneurs can finance building purchases as much as $20 million with an SBA 504 loan.

Are you ready to invest in your business growth and your retirement by buying a building for your small business? CDC Small Business Finance is the leading SBA 504 commercial real estate lender in the U.S. Our team of SBA 504 loan officers can provide a free lease-versus-buy analysis to help small business entrepreneurs assess long-term options.

SBA 504 Benefits


We’re committed to your long-term business success by offering long-term, fixed rate financing for your building, major equipment or land purchases. 

Tell our loan experts about your business, and they’ll work to match you with a financing plan that best suits you. Let’s talk! Reach us at loaninfo@cdcloans.com or (619) 243-8667.

In case you missed them:

5 Key Differences Between SBA 504 vs Conventional Real Estate Loans
In uncertain times, how can the 25-year SBA 504 loan help my business?
How a Fixed-Rate SBA 504 Real Estate Loan Can Give You a Valuable Competitive Edge in Business
Expert tips on picking the right small business loan for you – SBA 504 vs SBA 7a?
Should I get more than one SBA 504 loan? Why these business owners did


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