Residential renters aren’t the only ones wondering if now is a good time to buy. Business owners renting office space are also considering the buying proposition.
“The office market in Phoenix has shifted slightly in favor of owning rather than renting, especially for small business owners looking to purchase office condos,” said Chris Bane, senior loan officer with CDC Small Business Finance, the nation’s leading provider of SBA-504 financing. “Like residential home owners, purchasing an office condo is a less expensive way for a business to establish equity.”
Derek Achterfeldt, owner of Corporate Data Solutions (CDSI), recently decided buying an office condo was a good strategy for his business. After renting office space for more than eight years, Achterfeldt judged that today’s economic environment offers many benefits: a lower price per square foot, historically low interest rates and recovering property values.
“As our business continued to grow, we found ourselves needing to add staff, but didn’t have the room to accommodate new employees. We quickly needed to find a larger office space and when comparing renting to buying, buying made more sense,” explained Achterfeldt, who was able to purchase a new office with more than double the square footage of his rental for roughly the same monthly operating costs. “I‘m excited to have the room we need to continue to grow and service our customers’ technology needs.”
The IT solutions firm currently employs nine full time employees and serves small-to-middle market companies looking for skilled IT support, but who don’t want to hire a full time staff to do the job.
What was once his passion is now a thriving technology business for Achterfeldt. CDSI has steadily grown, in spite of a soft economy, by focusing on industries that have shown consistent growth in Arizona, including world-class golf courses and financial services.
“There’s a common misconception that business owners need to spend half a million dollars or more to make a solid real estate purchase,” said Bane. “In reality, you may be able to own a larger space than you’re renting for less money. But it’s not a slam-dunk. Business owners should sit down and do the math, have a plan, weigh options specific to their business and we can help with this process.”
Through CDC Small Business Finance and Bank of America, CDSI was able to secure the financing for his property with an SBA-504 loan of $247,500. Not only are the new monthly payments only $200 more than the rent they were paying, but the property has increased in value $60,000, improving the business’ equity.
Small business owners who are tired of paying rent and want to build equity can use the SBA-504 loan to purchase their own facility. Rates have been under 5% for 22 straight months and business owners are only required to make a 10 percent down payment.
To know if buying instead of renting makes sense for your business, check out the Lease vs Buy Comparison Calculator on the CDC Small Business Finance website (www.cdcloans.com) or contact Chris Bane directly at 602-317-1192.