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Your investment stake in commercial real estate varies based upon your use of said real estate. If you occupy your business address – you are an investor of sorts but generally classified as an owner occupant. Conversely, if your monthly income relies upon a rent check from your commercial real estate purchases – you are an investor owner.
Whew! As you can gather, a myriad of places to invest money exist for a small business. Machinery, equipment, customer acquisition, and new employees all compete for the investment dollar. Considered must be the return on investment for all of these opportunities to grow the business. Specifically – if I buy a new machine and spend X amount of money – will sales grow proportionately vs. how will a purchase of my premises affect the expansion of my enterprise?
We have a client who parlayed this method into a fairly substantial commercial real estate portfolio. Acquired were the properties – in different locations – his company occupied. Amassed were a dozen or so buildings. He then sold the business, struck long term leases with the new company for all of his properties and voila! He is a private capital investor. Before, the operation he owned made money and paid him rent – a daily double. Now, the returns are only from the rental income.