Buying
Owning the space your business uses
Owning your space can give you control over your costs and your future. It also ties up cash and makes you the landlord. Here is how I help business owners decide, and then buy well. Owning usually makes more sense when you plan to stay for many years and have the down payment.
Buyer representation
What owning your business’s space involves
A plain explainer if you’re new to this.
- What it is
Buying instead of leasing
Your business buys the space it uses, often a strata unit or a small building, instead of paying rent to a landlord.
- How it works
Mortgage instead of rent
You pay a mortgage, property tax, insurance and repairs. Lenders usually want 25 to 50 percent down, and you’ll pay property transfer tax and possibly GST.
- Ownership
Strata or whole building
A strata unit comes with bylaws, fees and a reserve fund. A whole building gives full control, and you can lease out space you don’t need.
- What I check
Fit, cost and resale
I check that zoning allows your use, the power, loading and layout, the true cost against leasing, and how easy the space would be to sell or lease later.
General information, not tax or legal advice. Rules and rates change, and every situation is different. Talk to your lawyer and accountant before you act on anything here.
When owning makes sense
Buying usually works best when you expect to stay in the area for a long time, the space suits your business with little change, and you have the down payment without starving the business of cash. It also helps when you’d like the property to be part of your retirement plan.
Leasing often makes more sense when you’re growing fast, when you might need a different area in a few years, or when the cash is better spent on equipment, staff or stock.
What I look at with you
- Your business plan. How much space you need now and in five years, and what the space has to do.
- Zoning and use. Whether your use is permitted, and what the City or municipality will need for permits and any change of use.
- The building. Age, roof, mechanical systems, accessibility and anything a lender or insurer will ask about.
- The real cost of owning. Mortgage, property tax, insurance, repairs and the cash you no longer have in the business, compared side by side with leasing.
- Space you won’t use. If the building is bigger than you need, the extra units can be leased out to help carry the cost.
Strata units, buildings and land
Many owner-users in Metro Vancouver buy a strata unit in an industrial or office building. They’re smaller and easier to finance, and the strata looks after the shared parts. Read the strata documents closely: bylaws can limit uses, signs and hours.
A whole building gives you more control and more responsibility. The due diligence checklist covers what to ask for.
Financing
Lenders look at your business as well as the property when you’re an owner-user. Some lenders, including the Business Development Bank of Canada, have programs aimed at owner-occupiers. Talk to a commercial lender or mortgage broker early so your offer has realistic conditions.
The financing guide explains what they’ll ask for.
Buying through a company
Many owners hold the building in a separate company from the business. It can help with liability and with planning a future sale. Your accountant and lawyer should set this up before you sign, because changing it later can trigger tax.
Questions people ask
Is it better to buy or lease space for my business?
It depends on how long you’ll stay, how much cash the business needs and whether the space will still suit you in five years. I can put the two side by side on real numbers so you can decide.
Can I buy a strata unit for my business?
Yes. Industrial and office strata units are common in Metro Vancouver. Check the bylaws for use, signs and hours, and read the minutes and depreciation report before you remove conditions.
Should the business or a separate company own the building?
Many owners use a separate holding company, but it depends on your situation. Ask your accountant and lawyer before you write an offer.
What should I gather, ask and watch for?
Documents to gather
- Two to three years of business financial statements
- Proof of down payment
- Your space needs for the next ten years
- Your current lease end date
Questions to ask
- Can I get out of my current lease when I buy?
- Does the zoning allow my use?
- What will property tax, insurance and repairs cost each year?
- Should a separate company own the building? (ask your accountant)
Common mistakes
- Buying too small for growth
- Forgetting how much cash a down payment ties up
- Not lining up the purchase with the lease end
- Skipping the building inspection
Typical timeline
- Year before your lease endsStart looking
- Offer to conditions30 to 60 days typical
- Completion30 to 90 days
- ThenBuild-out and move
Typical ranges. Your lease, lender and the City set the real dates.
Go deeper
If you’re looking for more details
Owning vs leasing, side by side
| Owning | Leasing | |
|---|---|---|
| Upfront cash | Down payment and closing costs | Deposit and build-out |
| Monthly cost | Mortgage, tax, insurance, upkeep | Rent and additional rent |
| Flexibility | Lower, selling takes time | Higher at the end of the term |
| Long-term value | You keep any growth | None |
| Repairs | Your problem | Usually shared by the lease |
Ways business owners often hold the building
Many owners buy through a separate company rather than the operating business, and lease to their own business. It can keep risks apart and make a future sale easier. It’s a tax and legal question, so ask your accountant and lawyer early.
Run the numbers
- Lease vs buyOwning usually wins over longer holds if the value grows and you have the down payment.
- Commercial mortgage paymentCommercial lenders usually want a bigger down payment and a shorter amortization than on a home, and they check that the rent covers the payments.
- BC Property Transfer Tax calculatorProperty transfer tax in BC is 1% on the first $200,000, 2% up to $2 million and 3% above that, plus another 2% on residential value over $3 million.
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Next step
Thinking about owning your space?
Tell me about the business and what you need. I can lay out buying and leasing side by side.