A business condo, sometimes known as a “condo,” is a privately owned individual apartment within a building with other flats, much like a residential condominium. Shared standard amenities like conference rooms, gyms, garages, elevators, and interior/exterior halls are owned equally by condo owners. In contrast, if a structure were “standalone,” the entire land would be yours to own and maintain.
An HOA, or “homeowners” organization, which sets and enforces rules for the property and its tenants, also governs commercial condos. A commercial condominium buyer joins the HOA and must pay dues (HOA fees). To maintain harmony and control, certain groups may be highly rigid regarding what members can do with their properties.
How Commercial Condos Benefit Small Businesses
Small businesses can benefit from commercial condo projects in a variety of ways. These condos not only give businesses the ability to determine their life course, but they also provide tax advantages. They can be a part of your investment plan.
1. Take Charge Of Your Future
Renting a space won’t be getting any cheaper any time soon. Most experts believe that even though the market may slow down shortly, prices will continue to rise. Small firms and entrepreneurs may find it more challenging to follow their passions while maintaining profitability due to rising company costs.
These people can forecast their future and lock in their monthly rates thanks to commercial condos. If you don’t own your property, your ability to stay there is always at the landlord’s mercy. We’ve seen landlords decide they didn’t want a tenant on their property any longer. This was despite rental price rises or after a tenant had spent tens of thousands on improvements. You can avoid experiencing that by investing in your property.
2. Affordability
What is the appeal of a business condo? You are not required to buy the entire structure. Since commercial real estate is typically purchased and sold on a property basis rather than a suite basis, the entry cost is frequently higher than most small firms can reasonably afford. However, the price is significantly reduced if only one suite in a building is purchased.
Even if a 1,200-square-foot office or retail suite costs $400 per square foot, your investment would only be $480,000. You already pay less than the average rent of $27.50 per square foot per year with a mortgage payment of about $2,750 per month.
How to Choose a Commercial Lender for Your Business
3. Tax Advantages
You won’t receive nearly as many perks from renting business space as from owning the property.
Business owners who own condominium units can deduct property taxes, interest, assessments, utilities, insurance, maintenance, and depreciation from the portion of the building that they own.
4. Put Money Into Your Future
What is your strategy for retiring?
Do you anticipate remaining in charge of the business forever?
Will you attempt to make a living by selling it and the proceeds of that sale?
When you own commercial real estate, multiple investment opportunities are available to you, and the most exciting part is that your company paid for it!
We advise our clients to lease the property to their company and own their medical real estate in a separate entity from their business. By doing this, the real estate is kept off the company’s records. This enables the owner to sell the business and lease the suite to the new owners, generating passive income over the long term.
The above advantages will assist you as you invest in your business.
