Buying a Building
One of the most taxing parts of planning ones business is the option to buy or lease the building the business will be located in. Seems like it would be a fairly straight forward choice… buying is better right? Not always. Lets take a look at why.
When our business plan writers are giving advice to clients regarding whether they should buy or lease a building, the biggest factor is how much money the client has to put down on the property. Generally, the SBA wont collateralize loan for more than 80%. This means, if the client intends to say buy a building for $1,000,000 plus another $400,000 in operating cash, they need to have about $340,000 to put down. However, if the client is open to leasing the space, they can then get in to the business for 20% of the total raise, or in this case maybe $500,000 or $100,000 out of their pocket.
While we have been trained that buying is better than renting in residential property, good business plan writers also need to consider the business plan to buy
a building and see if its feasible. Commercial building generally have much higher monthly costs than do lease spaces. All little nuance of maintenance fall on he business owner and distract him or her from running the primary business that occupies the building.
Last, a business plan to buy a building written by professional business plan writers needs to deal with depreciation. While the building is an asset that we know mentally appreciates, from a tax standpoint it can be depreciated as a long term assets along with equipment etc. Handling these many things in a business plan, is what makes a business plan writer a smart choice. Please call us with questions regarding having a business plan writer contact you for further consultation.
Next Article:
|
