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An option to consider
for your business is to buy a building or land through a commercial
mortgage. Its terms are flexible, and it makes the most sense when
considering cash flow. You can also consider this option when taking
over an existing business, and developing properties as investments.
One thing to keep in mind is that the lender has a legal claim over
the property until it is fully paid. This should not be a problem as
long as the borrower is true to their end of the agreement.
1. With permission
from the lender, a business is able to sublet spaces to other
businesses. Depending on the number of rooms in the building and
permission of the owner, subletting space to others can reduce
mortgage payments. Sublet enough spaces, and it may completely
offset mortgage payments all together.
2. Unlike renting, the interest paid on a commercial mortgage is tax
3. As previously mentioned, free space may be sublet.
4. If the value of the property increases, it makes your property
5. Mortgage payments will more than likely be similar to a rent
payment. Unlike rental payments, commercial mortgages offer a tax
1. If you're
currently having a cash flow problem, the substantial deposit
necessary could put a strain on your business budget.
2. The substantial deposit could be used for other business
3. Responsible for maintaining the property. When you rent property,
if something goes wrong, it's the owners responsibility to fix it.
Not so when purchasing-- the responsibility goes to the buyer.
4. Harder to relocate the business. If you're considering moving
your business in the future, commercial mortgages may not be the
route for your business. Depending on the economical climate of your
region, selling property could be difficult.
5. Just as an increased value of property makes your investment
worth more, the converse is also true-- if the value of land and/or
property in the region decreases, so does your value of your
As in any investment, purchasing land or buildings for commercial
purposes, business owners need to consider the location of the
property, if the business plans to relocate, and their cash flow
when making a decision.