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Ask Dave

Buying a Building

Make sure your small business is stable and that buying a building won't take up too much of your net worth before you do it.

QUESTION: Mike has a small business and wants to grow it, so they’ll rent for two years while they invest into the business. Is there a time when they should borrow money to buy a building?

ANSWER: Your business isn’t that stable, so you don’t need to get into the real estate business. If your business doesn’t grow, then you own a building. You can get sidetracked if you’re not careful … the building needs to be a small part of your world. If the majority of your net worth, that’s out of whack. If you can find a place where you can rent with an option to buy as a part of the deal, take it. Buy it if it continues to work out. Buying a building isn’t always a good deal, so make sure it is before you do it.