Many business owners who have their home located on their business property want to keep the real estate they built their business on when selling their company. If you want to keep your business property when you sell it, we will simply have to value your business without the real estate. Depending on the type of business and how much of your assets are built into your property, selling your commercial real estate separately can significantly lower the price of your business. However, the flip side is you can often lease the property for additional income.
AN OPTION FOR RETAINING YOUR HOME WHEN SELLING YOUR BUSINESS
Business owners whose residence is located on their commercial property will partition the property so they can sell the commercial section with their business. While dividing up the real estate takes time, the return on the time and investment makes it worth it. This may delay the sale of your business and take time and cost money, but taking the time to do what is necessary for your overall business sale will make you happier with the results.
There are a variety of ways to calculate your business real estate’s value. The value of your property depends on how you sell it. Baseline commercial property value is typically less than the property’s value when sold with the business and to the correct buyer. When Synergy Business Brokers performs your business valuation, we will consider the value of your property and the overall worth of your business.
Selling your business real estate with your company can be more profitable than selling your real estate on its own. When you sell your business property with your company, you sell it to an interested buyer who needs the exact property and building setup that matches your business. If you were to retain that property and then sell it on its own, it is likely to have less value. It can also be more difficult to sell your specific property. The perfect buyer is probably the person purchasing your business.
PROFITABLE WAYS TO LIQUIDATE YOUR COMMERCIAL PROPERTY
Since no commercial property is the same, there are various ways to liquidate your commercial property while selling your business as a whole. For instance, you could subdivide the sections of your business property that are not relevant to the business. Say, for instance, you have 10 acres, and your business buildings occupy 1 acre. You could subdivide the property, sell the 1 acre of commercial property with your business sale, and sell the remaining 9 acres as a separate “liquidated” asset.
REAL ESTATE OPTIONS AFTER YOU SELL A BUSINESS
Just from the examples above, you can tell there are a wide variety of options in selling your commercial property. With real estate values on the rise, you should consider how to sell your business and your business’s property most effectively. The case-by-case scenarios below are a list of ways to utilize your commercial real estate for profit when selling your business.
- Sell Your Property With Your Business: This is, of course, the most simple route to go in selling your commercial property. A lot of times, it is the most profitable route as well.
- Sell Your Property Separately: In certain scenarios, selling your property separately can be more profitable, but it will require more time and more paperwork.
- Retain Your Property & Lease It To The New Owner: Some business owners who want to retain their commercial real estate will lease it to the new business owner. This option can give the buyer the flexibility to lease the location and then purchase it later. Providing options to a buyer is often very attractive.
- Retain Property For Your Own Use: Some business owners we work with simply want to retain the commercial property for their own use. While this might not be the most profitable route, this is a route you can take to fit your own business sale. This can also work well when a buyer of your business may not need or want your particular location.
Synergy Business Brokers considers every business owner who is selling their company, their assets, and their real estate as the individual situations that they are. There is no one-size-fits-all. We will find out what your goals are and help you achieve them. We typically recommend keeping an open mind, that is, provide the option for buyers to purchase your real estate or lease it. And depending upon what type of business you have, the location may not be important, and perhaps the buyer may not need it. If that is the best route, we will suggest other options in selling your property. We have also had business owners in the past require to keep the commercial property since their home is located on it.
