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Is It Time to Consider Buying Your Business Location?


Are you wondering if you should buy your business location instead of writing a monthly rent check to someone else? The truth is, there are pros and cons to buying and leasing, each with certain benefits. If the prospect of owner-occupied commercial real estate is on your mind, we’ve compiled some things to consider. 

Gain Tax Benefits

The tax advantages of ownership are some of the strongest incentives to opt for buying over leasing. Noteworthy benefits include tax-deductible asset depreciation, interest, and non-mortgage expenses. Furthermore, establishing separate business entities may lead to favorable tax situations, allowing the mitigation of taxable income through the utilization of specific expenses and/or pass-through income. Always consult with a tax advisor prior to making any decisions affecting your business.

Maximize Cash Flow

Owner-occupied real estate is categorized by Sunflower Bank as a property where the owner covers more than 51% of the total rent received. If your current or prospective building has surplus space, bringing on tenants could enhance your investment by sharing or covering overall ownership costs. Beyond the advantages of real estate investment, this approach can generate additional cash flow, augment your earning potential, and offer flexibility for potential expansion. 

Plan for Your Future

Owning real estate instead of leasing contributes to the establishment of a legacy, integrating estate planning into future retirement succession. This approach provides future rental potential, stability, and equity appreciation to pass on to your loved ones. As part of diversifying your investment portfolio, real estate acquisition can play a pivotal role in your overall succession plan.  

Put Capital to Work

If you have capital available for use, consider the potential return on investment of using it as a down payment. If you feel you are not currently in the financial position to realize your dream of owning your own property, a consultation with one of our bankers can explore a number of different programs that may allow you to minimize your overall capital injection while putting your money to work for you. By analyzing conventional and Small Business Administration (SBA) loan options, we can provide you the necessary balance to pursue your financial goals. 

Real estate acquisition represents a long-term investment that not only reduces taxable income but also maximizes current cash flow. Partnering with your bank in exploring this option can be instrumental as you plan for a prosperous future for your family and your business. Contact us today to explore your options.

Business - Small Business Ownership

Ready to explore how Sunflower Bank can assist you? Speak to a personal banker at a branch near you, contact a specialist on our Wealth Management team, or find the right financial partner on our Commercial Banking team for your business needs. 

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This article contains general information only. Sunflower Bank is not, by means of this article, rendering accounting, financial, investment, legal, tax, or other professional advice or services. This article is not a substitute for such professional advice or services, before making any decisions related to these matters, you should consult a qualified professional advisor.