If you are familiar with the real estate business or have a significant amount of capital to start your small business you may consider buying your site instead of renting. All of the normal benefits of real estate ownership accompany the decision to buy for your business. You will build equity, have greater freedom of use with the property, and save on rental expenses. However, there are also some unique pitfalls to buying the site for your small business. Below are a few thoughts to consider before buying a site for your small business to make sure you make the correct decision.

Separating the business from the property site

Many small business owners who buy real estate to house their business will make sure that the ownership of the business and real estate is separate. If the business and real estate are under the same business umbrella then creditors would more easily be able to go after the real estate in case the business fails and is no longer solvent. By making your business a corporation and having your real estate owned by either a separate company or in a trust you can insulate your real estate from liability.

Growth potential of the business

If you believe that your business is going to grow quickly you should take this into account when buying the building that will house your business. You may want to see if the property next door to yours will be available so that you can add on if you want to. Also, see if there is room to build additions to your business.

Zoning laws applicable to the site

Many of the same zoning concerns arise whether you are buying or renting. Ensure that you can use the building the way you want or that you can get a variance without a large expense or delay. Remember, just because a business is now using the site does not mean that you can expand or remodel however you may want to. Check with your local zoning department to find out what zoning regulations apply to the building you are considering before you buy.

Signs

Some cities and towns have regulations about what kind of signs you may place on your business, including regulations of the size. Make sure you are in compliance with these rules.

ADA compliance

Find out if the building you are buying is in compliance with ADA requirements and if it is not, check the costs of redesign. This can be a very expensive change for the building so do thorough research before making the decision to buy.

Conclusion

If you are starting a new business and have real estate experience or significant capital it may make sense for you to begin by buying a site instead of renting. If so, make sure to consider all relevant zoning laws, how you want to structure your ownership, if your business is going to expand and your ADA compliance. These considerations can be costly if not taken into account before buying your property. For more information contact a local business or real estate attorney to give you a more complete picture.[1]