If the right set of circumstances arises, investing in commercial real estate can be a great idea for any small business. There are a number of ways that a small business could go about financing a commercial real estate transaction, and if anyone of these is possible for your small business, it’s something you should definitely consider.
The Right Circumstances
Before you consider becoming involved in a commercial real estate transaction, there are some factors you should think about. First of all, it’s best if you have been in business for at least five years because that’s what lenders will be looking for. You should also have a good idea of how large your company is going to become, and how much space it’s going to need. It’s also better if your company is privately held because publicly traded companies do not receive the same kind of advantages from real estate assets that private companies do. You should also look for any kind of tax benefits that might accrue to your small business on a particular commercial real estate transaction.
Methods for Financing
There are quite a few ways that you can arrange for financing your commercial real estate transaction as a small business owner. The first option, of course, would be securing a bank loan from a traditional lender. You might also be able to secure an SBA loan, either through the 7(a) program or the 504 loan program. Seller financing is always a possibility if you can find a building owner who is willing to conduct the financing on their own behalf. Third-party financing is another option if you can secure the involvement of a third party in exchange for something of value to them, for example, an ownership share. The last method for financing a commercial real estate transaction is to simply pay cash for it, if you happen to be well-positioned financially, and will not suffer from a huge subtraction from your assets.
Need Money for a Commercial Real Estate Investment?
If you need funding for your next commercial real estate investment, we may be able to help. Contact us at Third Bay Capital so we can consider some options for financing with you.