Why Invest in Daytona Beach Commercial Real Estate Now?

Posted by admin on May 4, 2009 under Good Info - Read It, by Tim Davis | Be the First to Comment

by Tim Davis

So you own a television and a computer – and every time you turn one or both of them on, they instantly spew forth ideas that you should sit tight and keep leasing space for your business. Vacancy rates are on the rise, rents are dropping, banks are foreclosing on properties, distress sales are on the rise still, etc, etc. Well maybe your computer doesn’t “spew” this info – but your fax machine probably does.

The basic point is in order to by in business, you have to have space to conduct that business.  Like it or not, you unless you are drop shipping infant toys you sell on ebay, you most likely need a traditional space to operate your business. This could be an office, a retail store, or a manufacturing or industrial space for your going concern. Rent is expensive, possibly the most expensive piece of your overhead after labor and of course the cost of goods sold. While there are no guarantees and I certainly have no crystal ball here in my office, There is a good chance of you being able to recapture some of that expense from the eventual sale of the real property at some point. This is when you decide to cease doing business at that location (for whatever reason).

Speaking of selling the property in the future, this is an important issue the owners of small businesses in particular. Whether it is a sole proprietor, partnership, family business, or other – when these people do decide to sell the business, retire, split the partnerships, etc – The real estate can often be a great revenue stream going forward for those owners. I know I have listed several solid investment properties in the last couple of years that were owned by people who operated businesses in those buildings for many years, and either sold the business itself and kept the real estate, or simply retired and were now using the building that they had paid off(or down considerably) as a new source of income going forward.

While it is concerning to talk about how much the market is off, and how prices are down 30-40% from the highs just a few years ago, the reality is they are still up a great deal compared to 10 years ago. Most experts say that the 10 year rule is king here – if you think you can operate your business from this location for ten years – it is a better deal for your business to buy the building than to lease. These fluctuations in value that are so widely reported in the media are short term remember – if you average any given 30 year span of the American economy, you will still see a 3% gain annually at the worst. Commercial real estate has long been an excellent hedge against inflation for this very reason. It is no mistake that the the largest Real Estate Investment Trusts (REITS) in the WORLD seem to buy and sell trillions of dollars of commercial real estate every year.

Speaking from personal experience, I know the idea of spending money on commercial real estate right now is not at the top of any business owners list. I also know that everyone keeps saying that this is the time to buy – and to be honest with you I don’t know if this is the time, or if there is an even better time in the near future. What I can say with certainty is that for smaller businesses, owning the real estate you operate from has some compelling benefits. And the prices are back down to the 2003 prices – its like someone hit the reset button on the Nintendo – time to play?