Differences in Buying a Business Vs. Buying the Building

Purchasing commercial real estate is much different than purchasing a business. If you are looking into buying commercial real estate with a working business resident chances are you will be purchasing just the building and will have no affiliation to the business that uses it. Here are the differences in purchasing commercial real estate vs. buying an actual business.

Buying a Business

When you buy a business you are taking over an operation that is already generating cash flow and hopefully making significant profits or has potential to. There is already a customer base, reputation and maybe an employee or two depending on how large the business is. While it is possible to retain a loan for purchasing a business you will have to do some work to prove to potential lenders the success and potential success of purchasing the business. Many times a business loan is going to require a significant amount of money down which leads business buyers to bring in investors so they can get off the ground and running.

Purchasing Commercial Real Estate

Commercial real estate is a pretty broad term, it can include a number of different physical property types. Basically commercial real estate is a term meaning a property used to generate profit. This can include apartment buildings, office buildings, retail space, industrial warehouses etc.

Obtaining a commercial real estate loan is more complicated than a standard home loan because it is an investment. Usually commercial real estate loans ask for 20 to 30 percent down and much more proof that the lendee is capable of making payments.

Purchasing a Business with the Option of Purchasing the Building

Sometimes a business owner that has purchased a brick and mortar location to operate their business from will offer the building with the sale of the business. Though a business owner is not required to sell the real estate to sell the business sometimes they will include the property in the sale to entice a more reputable buyer.

Interested in buying commercial properties in Minot and other surrounding areas? The team at signal realtors can help you determine what type of property best suits your needs and investing interests. We can help you understand the purchasing process and get an idea for what income might be generated and commitment. Whether you are looking for a building for your own business or just to purchase a property. For more information please browse our website or contact us anytime.

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