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Buying property as a small business question

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    #1

    Buying property as a small business question

    I figured I'd tap the TBH brain trust on this.

    Last year I started my own design/fabrication business focusing mainly on the transition from concept to fabrication. I have been working from my home shop since I started. Most of my work has been design work, but I would like to grow the fabrication side of my company and I've outgrown my home workshop. Currently, the business is set up as a sole-proprietor. I am the only employee currently, though I imagine that may change soon.

    I found a property I'm interested in if I can get the money to work with the bank. An older couple is selling it, and they inherited it. They don't have the property listed with a realtor, and I don't have a realtor either. They may consider owner financing, but are not interested in leasing the space.

    Now that you know as much as I do, what suggestions would you make to a small business owner who has never purchased property for his business? Should I make the business an LLC to protect myself? How does the paperwork for purchasing the property work without realtors? ...with owner financing? Any pitfalls I should keep an eye out for?

    Thanks for the help in advance. I'm a pretty risk-adverse person, and I really stepped out of my comfort zone starting my business. It has turned out to be a great experience, so I'm trying not to let my fears inhibit my opportunities for growth.
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    #2
    keep in mind buying property is not deductible business expense. It goes on your balance sheet and only interest payments would be deductible.

    Few things you absolutely need in business. An accountant, a lawyer, and a banker. Those 3 things are what you need to answer all the rest of your questions.

    Continuing without them is very risky if you plan on running a business. Accountant will advise on the corporation probably an LLC is best, but you have to report texas franchise tax and each year you have to produce a K-1 for federal taxes. Hence the accountant. The lawyer will draw up the paperwork and can help you with the property paperwork.

    There are promulgated forms you can use for the real estate transaction. You'd have to fill them out and send it over to the title company. Doing all this w/out a lawyer or a real estate professional can be risky though.

    Comment

      #3
      Originally posted by DeadEyeB View Post
      keep in mind buying property is not deductible business expense. It goes on your balance sheet and only interest payments would be deductible.

      Few things you absolutely need in business. An accountant, a lawyer, and a banker. Those 3 things are what you need to answer all the rest of your questions.

      Continuing without them is very risky if you plan on running a business. Accountant will advise on the corporation probably an LLC is best, but you have to report texas franchise tax and each year you have to produce a K-1 for federal taxes. Hence the accountant. The lawyer will draw up the paperwork and can help you with the property paperwork.

      There are promulgated forms you can use for the real estate transaction. You'd have to fill them out and send it over to the title company. Doing all this w/out a lawyer or a real estate professional can be risky though.
      Good info. Is there a specific type of lawyer I should be looking for? Like a real estate lawyer, or small business lawyer or something like that?

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        #4
        Originally posted by crumrw View Post
        Good info. Is there a specific type of lawyer I should be looking for? Like a real estate lawyer, or small business lawyer or something like that?
        Not to solicit business, but.....me. I do this daily. I can help on the CPA side too if Sherman isn't too far for you (realizing that most business can be handled by phone and e-mail).

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          #5
          we were in a similar situation. Bought the building personally with owner financing for 15 years at 5% interest. We have since formed an LLC for our business and lease the building to the business.

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            #6
            I would advise you to contact Grayson. I will tell you what I have done with my businesses. My businesses are all LLCs. The property where my businesses are located are all owned by a separate LLC and leased back to the business.

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              #7
              Owner finance and pay em as quick as you can

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                #8
                Grayson can help you out

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                  #9
                  For right off purposes lease a building. Leasing is 100% right off but you don’t own it. If you buy you can deprecate it over 39 years. Both sides have positives and negatives really depends on your long term outlook.

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                    #10
                    Set up an LLC, go for the owner finance but I would still get a realtor involved to make sure all i's are dotted and t's crossed.

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                      #11
                      Originally posted by Phorizt View Post
                      we were in a similar situation. Bought the building personally with owner financing for 15 years at 5% interest. We have since formed an LLC for our business and lease the building to the business.
                      This works well.

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                        #12
                        Man, this is great y'all! Thanks for the advice. Already learning a ton!

                        Grayson, I PM'd you. Send me your number, and I'd love to explain more about what I'm trying to do.

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