Buy Your Office Building : Could This Be Your Path To Building Wealth
January 16, 2024
Buying an existing office building and moving in as an owner-user offers several advantages for high-earning professionals like attorneys, doctors, CPAs, and dentists. Here are five key reasons:
Owning a property allows these professionals to build equity. Unlike rent payments, which are a pure expense, mortgage payments contribute to acquiring an asset. As the property's value appreciates, it can become a significant part of their investment portfolio. Owner/Users often receive preferential lending terms and conditions making this an easier entry or addition to a commercial real estate portfolio.
Stable Overhead Costs:
When professionals own their office space, they can stabilize their overhead costs. Renting often involves unpredictable rent increases, but mortgage payments can be fixed, especially with a fixed-rate loan. This stability aids in long-term financial planning and budgeting for your business.
Income from Tenants:
By purchasing a building that already has tenants, professionals can benefit from an additional income stream. This rental income can offset the costs of the mortgage, maintenance, and property taxes, effectively reducing the net cost of owning the building. Diversifying income streams is also a solid hedge against changes in the economy.
Owning a commercial property comes with tax advantages. Owners can deduct expenses such as mortgage interest, property taxes, and certain costs involved in maintaining and improving the property. Additionally, depreciation of the property can provide substantial tax benefits. This one is a "your mileage may vary" component, as each business and individual has different tax goals and strategies. Commercial real estate investment can have a significant income on taxes and should be discussed with a tax advisor.
Customization and Control:
As owner-users, professionals have complete control over their office space. This freedom allows them to customize their work environment to suit their specific needs and preferences, which can enhance productivity and client experience. Additionally, you will own those improvements. Often, tenants invest a lot of money and resources in a leased space and have to leave them behind when they move or their lease ends, owning the building allows you the comfort of knowing those investments will be with you for years to come.
Overall, owning an office building provides financial benefits, greater control over the workspace, and the potential for additional income, making it a wise investment for high-earning professionals. However, there are a lot of variables to consider, let one of our trusted advisors help you analyze your situation and determine the right investment for your needs.