Own Instead of Rent for Small Business Owners
Own Instead of Rent & Pay Yourself First
One of the best lessons in teaching others how to save is to pay yourself first and set aside a reserve or savings for a rainy day. A similar approach is to use the same mindset and pay yourself each month by accruing equity in a building you own. Paying rent is an expense but investing in your own building is a way to accrue equity year after year. Before you know it, 10-15 years goes by and the building is yours. No mortgage!
Interest is Tax Deductible
Mortgage interest provides a tax deduction. Paying rent does not provide this added advantage.
Build Personal Wealth Incrementally
Just like paying down your house the same holds true for paying down the mortgage on your own office building. Ownership leads to equity and equity is wealth.
Throwing Money away each month
Rent is a monthly expense without any other benefits. As a commercial building owner I am happy and thankful to those that pay rent each month. Those folks payoff my mortgage payment each month and once the building is paid off the money becomes another income stream in retirement.
Depreciation Saves Money
Over the life of the building you can depreciate a part of the building year-after-year. A good way to reduce your annual tax burden.
Pride in Ownership
Owning a building is a lot better for the soul than renting. It makes you feel good and provides a certain amount of self-worth and net-worth
Flexibility as an Owner
Remodeling rental property is often very difficult to do. It requires landlord approval and any money invested in the building becomes the landlords once you move out. The money used to finance remodeling is an investment in yourself instead of a freebie to the landlord.
Value in Co-Ownership
Some businesses do not require a lot of square footage and justifying a building can become difficult. One option is to connect with your network of colleagues and business relationships and consider co-ownership to achieve mutual benefit for everyone. Sharing the risk and reward may prove to be a worthy endeavor.
Equity – Money in the Bank
So now you own the building and are ready to sell – What a great position to be in! Now the equity shown on the balance sheet can become the greenbacks in your bank account.
Owning is more Fun
Plain and simple; owning is a lot more fun than renting. The most fun is receiving rent checks for the building that is owned outright. Owning provides a great nest-egg for the future and a great way to earn income without working day-after-day.
If any of this sound appealing I am happy to put you in contact with the Brokers, Agents, and Bankers that we have come to trust over the years at AJB. Besides, AJB might be of assistance for remodeling or the new addition at some point in the future.
If enough readers express interest I am willing to put together a panel of experts and invite you to learn and discuss renting versus owning – Let me know?
The question – Give your money to someone else? Conversely, look in the mirror and give it back to the person looking back at you? You decide!