Answers to Your Commercial Financing Questions

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Answers to Your Commercial Financing Questions

By Bill Burke

Q: I have a small business that is growing and I am thinking about leasing or buying commercial property. Is it difficult

to find something in Prince William or Manassas?

A:  It depends on your business type, amount of space needed, and your budget. Office space is harder to find than other types. The county is currently running at about an 80% occupancy rate. New space is coming but is likely to be more expensive. Flex space (multi purpose) is a good type to explore.  Flex is available in eastern and northern Prince William. The Gainesville area offers a selection of heavy industrial, too.  For larger warehouse  space, look along the Route 1 corridor. The key is to match your space and location to the logistics, location, costs and configurations defined by your business model.

Q: What are the advantages of buying over leasing?

A: When the property is paid off, the operating costs of your enterprise should drop significantly.  Payments typically stay fairly level for several years at a time. And, you should build equity. Lease payments never stop and they typically increase every year. However, leasing provides more flexibility. If the needed cash investment for purchasing is affordable, then compare the benefits of owning to those of leasing. And, YES, do consult your tax advisor before you jump. There are many ways to structure things for maximum tax advantage.  For instance, it may be more advantageous for you to own property as an individual and then lease it back to your business.

Q: Is buying a commercial property a good investment? I don’t own a business but I am thinking about owning a property and leasing it out.

A: Sure, provided you do your homework first and structure your acquisition well.  Get professional real estate advice if you are not seasoned at this. Important areas of due diligence include zoning, approved uses, transportation, expansion rights or restrictions, and the state of the immediate and broader leasing and sales market. Check approved and proposed uses of areas including and surrounding your target property. An off-ramp in the “wrong” place could quickly change the values of nearby properties. Explore your financing options and the tax attributes of the potential transaction. Also, maximize your potential return by consulting a Pro in the leasing world before seeking, negotiating and executing leases.

Bill Burke is a 30+ year veteran of the real estate world  and an Associate Broker with Long & Foster Realtors. He focuses on the commercial and land needs of clients. Bill may be reached at 703-216-8309



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