Purchasing Property for Your Illinois Business

illinois-roth-ira-retirementA recent survey of the National Association of Realtors indicated that the commercial real estate market maintained momentum in sales in the third quarter of 2013.  As the real estate market regains stability you may be wondering if now is the right time to stop leasing your business space and make the move to buy.  Some considerations include:

  • Determining if you can afford to purchase property.  You will need to take a hard look at your cash flow, assets, and balance sheets.  With the recent bank failures, down payment requirements can be out of reach for some businesses.  Above all, you must be certain that purchasing property does not impede the financial stability of your business.
  • Determining what the monthly mortgage will be.  A mortgage banker can help you figure out what your monthly payment would be, including taxes, based on the size space you desire and the area.
  • Comparing that number to comparable lease properties.  Determine if it makes sense to own.  In some areas, commercial rental properties are still depressed, so renting may have some advantages in these cases.  You will also want to be sure that the spaces you are considering for purchase will be large enough to meet the growing needs of your business.  If you anticipate the need for larger space you may want to reconsider purchasing property for your business.
  • Determining how you will purchase the property.  Discuss with a qualified business law attorney how you will set up the owning entity.  It can be set up as a land trust, an LLC, a sole proprietorship, a corporation or other.  You may not want the owning entity to be the same entity that owns your business.  Separating the owning entities may provide you some protection in the event of a lawsuit.
  • Determining how the owning entity of the property will set up the rental agreement.  Once the property is purchased the owning entity of the property can now lease the property to the business.  You will need to determine rent, lease structure, liability coverage, and tax structure.

Taking the step from leasing to owning can be a prudent business decision.  Be sure you are properly advised in all matters of this venture.  Contact an experienced Illinois business attorney today.