Monday, December 13, 2010

What Motivates a Company to Relocate? Five Reasons (part two of five)



I provide location advice for owners and occupants of industrial buildings in southern California. The second part of this five part series entitled "what motivates a company to move" involves the chance to own a location. In a recent post, we discussed the characteristics of most occupants that decide to buy their location. You can view this post by clicking here. Part one of this five part series discussed rent savings as the primary reason that a company would consider relocation. You can read part one by clicking here.
A Chance to Own:
So today we discuss the decision to own a location. Assuming of course that an occupant possesses the characteristics of most in the buying profile (time in biz, closely held, and favorable market conditions), owning a location can prove to be a way to lower operating costs, increase owner equity, and provide a stable "rent" model for the length of the financing.
A Recent Example:
I am currently working with an occupant that is considering owning their location. The occupant's motivators fall in line with those found with most companies considering buying...length of time in business, lease expiration looming, favorable market conditions, ownership "rent" similar to market rent, owner with a desire to diversify personal assets into real estate ownership, etc. We believe that the occupant in question will purchase, lower their "rent", increase their efficiency, and build equity for the future.
Available Financing:
The financing available to an owner occupant these days is truly amazing. Most owner occupants finance through the use of SBA financing via the 7A or the 504 loan programs. Both offer an owner occupant the ability to buy with a minimum down payment...in most instances 10% of the purchase price. the 7A is a bank loan guaranteed by the SBA and the 504 loan is actually two loans...a bank first of 50% of the purchase price and a second of 40% of the purchase price which is a 20 year fixed debenture made by the government. Both programs offer the occupant VERY low interest rates, varying amortizations and a fee waiver through the end of the year. We will post about the specifics of these two loan programs in the future. For now, suffice to say that financing is available and affordable to most owner occupants.