How to Buy a Building for a Business: Powerful Tips + 1 Trap

Do you own a business that currently rents commercial or office space?

Are you wondering how to buy a building for a business?

The basic 5 steps are somewhat similar to buying a house – typically you’ll get pre-qualified with us before you go shopping or write an offer.

Start a conversation with us (free!) for Pre-Qualification.
Shop for a building or make an offer on the property you have identified
Complete / Assemble the Package. We’ll need 3 years of tax returns (business + personal), P&L, an application, property info, and a purchase contract.
Appraisal & Due Diligence; Phase 1 Environmental Review usually
Closing

How to buy a building for a business is pretty similar to buying a home – but the business qualifies, instead of you with your personal income.

How would you like to build your future wealth and own instead of rent?

If you are familiar with McDonald’s franchising, you’ll recall Ray Kroc actually made millions more by owning the real estate under the franchise and leasing it back to the franchisor.

We have a unique loan program that is designed specifically for people wondering how to buy a building for a business.

This program features…

10% down in many cases, subject to cash flow requirements
A 25 year fully amortized term – so in 25 years, the loan is paid off.
A *very* competitive below-market fixed rate
Government SBA (Small Business Administration) backed
With no additional collateral requirements, though we may be able to wrap other equipment into the same loan in some cases
Up to $5,000,000 Loan Amount.
51% owner occupancy on existing-building purchases, or 60% on new construction.

This program is aimed at healthy businesses who are looking to own instead of rent, though the program does allow for a range of uses, such as

Land purchase & improvements
Construction of new buildings
Renovation or remodeling of existing buildings
Refinancing of existing debt, secured by property and/or equipment

Note certain industries are disallowed (“vice” industries typically i.e. strip clubs).

Franchises are allowed in most cases subject to owner occupancy.

This loan, designed to help people seeking how to Buy a Building for a Business, can actually be used for office, warehouse, hotel, recreational facilities like RV parks or marinas, retail, restaurant, subject to the 51% occupancy requirements.

Some additional common questions about this program:

How much does it cost to buy a building for a business?
Free, at first, to get pre-qualified and start the ball rolling. Once the file is reviewed, there are some hard costs related to due diligence that vary by file. We will review the file before any fees are incurred, and once we start, the approval rate is very high – if we cannot fund you on this program, we’ll recommend another path and other options.
How long does it take?
To be honest, due to PPP and Covid, banks are moving slowly and demand is high – assume ~ 12 weeks. In some cases it can go much faster (say, a month), on others, 16 weeks. A major factor is your ability to provide docs, and the ability to get necessary due diligence such as appraisals, geological or environmental surveys, construction plan approval, etc.
What are the rates?
They very, but these are *very* competitive loans and in high demand.
How much does it cost to buy a commercial building?
This varies, but say, hypothetically, you bought a building for $5,000,000 – you might put as little as 10% down ($50k), and costs related might be $23k (varies: if you have a restaurant that’ll be fewer environmental concerns than, say, an oil refinery). In return, however, you now own a $5,000,000 asset at very favorable financing.
How to buy a commercial building with no money
That’s possible, but not on this program, and it typically involves seller carried financing. This program requires a minimum of 10% “skin in the game”, however, we may be able to pull that cash from another asset so you effectively come in with no money down.
Are these Government Loans?
Yes, thought the SBA doesn’t lend directly on these, they work like “Fanny / Freddie” if you’re familiar – they guarantee a portion of the loan so that the banks can be more aggressive and frankly take more risk than they otherwise might.
How do I get started?
Easy: Contact us, or fill out an application. We’ll be in touch – we’re friendly like that. Note once we review your file, we will recommend who we believe to be the best lender for you. Banks have a wide range of appetite and allowances due to portfolio requirements, so even if you have been turned down by another bank, talk to us. Our job is know the landscape and what the best products are for you. We have a network of over 1300 banks, investors including institutions and individuals, non-bank funding sources, etc.