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Financing a Building Purchase
Question
Forum Responses
I bought my building 20 years ago, and now it's financing my retirement to the tune of almost $5K a month for no effort on my part. Best investment I ever made.
From contributor A: SBA will require only 10%, but the paperwork and intrusion into your business is more intensive, and the bank/closing fees can be very significant. I just did an SBA, but wish I had the resources to go conventional. You will need a fair and simple accountant to help with all the reporting, no matter which way you go. If you currently have a business relationship with a bank (equipment loans, line of credit, etc.), talk to them to see what kinds of costs you will incur, and how you plan to pay for the building. From contributor L: After leasing for quite a few years, I bought my shop. I've added on 3 times and now am about out of land to do any more. Sure wish I had considered the land before getting in this far. As it is, it would cost a lot to move to a new site. Trapped! I lease the shop back to my woodworking company from a separate corporation. It will finance much of my retirement. From contributor T: My company provides business consulting services for the wood industry. If it were my business, I would buy the building in my personal name and rent it back to the business. This allows you to pull a little more income out of the business while building all of the equity for the building in your name. From contributor J: Expect a rent increase shortly after the closing, since all leases are null and void with the sale of the property. From contributor X: I have found in the past that a conversation with your landlord can work wonders in your situation. Questions that need to be asked:
I bet you could work out some kind of deal with your landlord. Find out the whys and let him know that you're very, very interested in his property. Pay him a little bit more in interest than he can get at a bank for carrying the note. You can always refinance later for a better rate. Should you default, he would still have his property and be a bit richer. Besides, it's all deductible. Just ask if something can be worked out. I did, and acquired numerous properties this way.
From contributor L: You would have to check in your state but here, the sale of a property does not void a lease! Would you like to add information to this article? Interested in writing or submitting an article? Have a question about this article? Have you reviewed the related Knowledge Base areas below? 
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