Complementing your business value through real estate holdings
Many business owners fall into a trap - they conflate their business value with the value of their real estate.
A business’s value is merely a present-day dollar figure of the sum of all expected future cash flows. And if a company is buying real estate to house its operations, that real estate augments its core functions instead of driving business value.
But this isn’t to say that real estate isn’t valuable to an operating company. Instead, it should be regarded as a standalone investment, and any capital budgeting decisions should be viewed through this lens. In fact, real estate can offer diversification from your core operations, in addition to providing strategic tax benefits. And depending on your stage in life as a business owner, you can even retain your real estate as a retirement investment for residual income, after you sell your business.
If you need to pay rent anyway, maybe you should start fostering equity growth by taking out a mortgage and paying yourself rent instead.
Interested in building a new facility but don't know where to start? Don't have the time to manage a "one-off" development project and want a real estate consultant to help manage it for you? Check out our real estate development solutions for small businesses below.
