Nevertheless, there are numerous financing options for both good and bad situations. However, not all business owners keep great records or show taxable profits. Good financial records and a profitable business are, of course, important. Available Financing for Owner Occupied Commercial Real Estate This, combined with your company’s profits and cash flow, assure lenders that their risks are low. Generally speaking, lenders consider OOCRE a lower risk, because they know the owner will be committed to the property both as the landlord and major occupant. Be prepared to show a solid financial statement, a profitable business record and enough cash for a down payment to qualify for financing. Small Business Administration) lending purposes, a property is considered owner occupied when 51 percent or more of the property’s space is occupied by the owner’s business, and the owner pays at least 51 percent of the rent.īeyond that, lenders want to know your business is secure. What are the Requirements for Owner Occupied Commercial Real Estate?įor SBA ( U.S. Those rental payments create cash flow that can go toward your mortgage as well as the maintenance of and improvement to your property-both of which you also control. And as you build equity in your OOCRE, you may one day leverage this asset by either selling the property or leasing it out for the benefit of an income stream. Therefore, adding commercial real estate to your investment portfolio can reduce risk without sacrificing return. When you own commercial property, there are certain tax advantages such as the ability to depreciate the asset and the ability to deduct the annual interest on the mortgage.Īlso, the value of commercial property tends to appreciate over time. The Advantages of Owner Occupied Commercial Real Estate Let’s take a look at some of the advantages of OOCRE, as well as the qualifications and available financing. Owning the property your business occupies offers financial and material advantages that are not available to you as a lessee. When that happens, consider investing in yourself via owner occupied commercial real estate, often abbreviated as OOCRE. However, there may come a time when a business owner becomes frustrated paying for someone else’s real estate.
The vast majority of business owners start out renting the space they need.
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