Why Business Women Should Invest in Real Estate

business woman looking out a window

by Mark Machaalani

For business women, real estate investments serve multiple attractive purposes: Ease of business expansion; ease of investment financing; tax deductions; subsidiary entrepreneurship; increased marketing; and potential for lucrative profit. Let's look at each.

Ease of Business Expansion

Many businesses start on a shoestring, often from the founder's home office. As they grow, they often move into a small warehouse or office space rented from others.

Business women who invest in real estate can avoid throwing away those monthly lease dollars, instead purchasing their own commercial property that uniquely serves their needs.

Ease of Investment Financing

Real estate loans are among the easiest and most affordable loan types to obtain. Currently, the average rate of a U.S. mortgage is approximately 4 percent, with some available at less than 3 percent. As example, entrepreneurs whose firms are going to occupy at least 51 percent of the commercial real estate, can easily qualify for a loan from the U.S. Small Business Administration (SBA,) once the company has been in business for three years and has established good credit. Several lenders and organizations offer low-rate financing specific to women-owned businesses that have been operating for a year or more.
Tax Deductions

A business woman who owns commercial rental property can actually avoid capital gains taxes on the cash flow derived from the rental. Mortgage interest deductions and depreciation enable this terrific perk for property ownership. What's important here is that she leverages her capital - that is, she borrows money for the purchase of the rental property.

Subsidiary Entrepreneurship

Think of this as hedging your entrepreneurial bets. Your fledgling business is probably the results of a dream - that is, your idea for a new concept, tool or service. Untested, it might leave you on shaky financial ground for several years. Real estate, on the other hand, is a tried and true form of entrepreneurship and, except during recession, is one of the more lucrative and secure forms of business ownership. A business owner who as well is an experienced commercial real estate investor has additional areas of expertise, and a second source of income during the hard startup times.
You might even consider flipping real estate as a side venture - that is, buy commercial property, make necessary improvements, and quickly sell at a profit.

Increased Marketing

Most industries and business products have specific and somewhat-limited audiences. Your feminist T-shirt business will primarily lure liberals and females. Your used bookstore is not likely to target millennials, who prefer to read from Kindle or other e-readers. Real estate, however, can be of interest to just about anyone. Renters might be retirees looking for their winter home, or small businesses needing office space. Additionally, rental properties have brick-and-mortar advertising and marketing space.

In luring prospective renters or buyers, you can as well market your business, whether it's in your e-mail signature sent to those inquiring about the real estate or rental property, as a widget on your real estate property blog or website, or even as a banner on the commercial building itself. You might even discount your business services or products to your renters, or affiliate with your renters' businesses.

Potential for Lucrative Profit

The profit from real estate investing is both ongoing and long-term:

  • The current median capitalization (cap) rate for commercial real estate is 6.2 percent. Defined as the rate of return on an investment property. The calculation is: net operating income divided by current market value. For business women who purchase commercial property with a 4-percent-interest loan, this represents an approximate 2 percent annual gain.
  • No matter the use you make of your commercial property - to house your business, or for rental income - that property will almost certainly appreciate. While those who work for others are paying into their 401(k) or pension, you are investing in your commercial property. That property or properties, upon sale, could provide a hefty nest egg for your retirement.

Business women who invest in real estate save money, earn money, add expertise to their business repertoire, and expand their firm's marketing potential. Real estate is one of the smartest investments a business woman can make.

About the Author: Mark Machaalani is a Solicitor Director & Co-founder of Unified Lawyers. Mark is an experienced litigator and commercial lawyer practising in the areas of commercial litigation, property law, debt recovery, building and construction, bankruptcy and insolvency, insurance law, asset protection, retail and commercial leasing, the sale or purchase of business and conveyancing. Read more about him here. https://www.unifiedlawyers.com.au/about/mark-machaalani/

Photo credit: Eli DeFaria

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