Commercial Mortgage Vs Paying Rent for Commercial Space by Sua Truong
Do you dread those increases in lease payments every year and the huge jump every 5 years?
If you have a business and renting out a commercial space, why not own it?
In the short term, the math may hurt operating cash available since it will require a 15% to 25% downpayment to make this happen. Your cashflow will increase since the mortgage payments (amortized over up to 25 years) would be less than you were paying on your monthly rent.
Long run, with a 10 to 20 year outlook, you would have paid down a large part or all of your mortgage and most likely the value of your property went up considerably.
It’s like having a lease that keeps going down every year instead of up!
Big bonus: if you plan to sell the business, you can sell it and have the new owners of that business pay you rent for the property you own (with big rent increases each year!!).
A few years ago, rates were in the 5% to 6% range. Today, it’s possible to get it down to 3.00%!! (Or lower on multi-rental properties)
Take-away: It’s a win-win. Pay less each month, build equity and eventually rent it out for passive income (at retirement).
Thanks to Robert Klein for encouraging me to help people be more aware of the alternative options out there.
Contact me for more details:
Mike Knoll – Mortgage Professional with Invis Inc.