Michael Bull: Bullish On Owning
In a kind of perfect storm of commercial real estate media, this week found Michael Bull radio and web host of the nationally syndicated Commercial Real Estate Show a guest on NAR’s Commercial Connections Podcast hosted by Alex Ruggieri. The topic: market conditions for office and industrial are pointing users more than ever toward buying and away from leasing. The quick takeaways:
Buying Beats Rent Today Because…
- Low replacement cost. Especially in suburban office markets, properties priced at $50/sq. ft. below replacement cost are widely available
- Low interest rates. From federal programs providing 10% down terms and conventional loans with lockable rates, the credit picture is rosy, says Bull.
- Also helping is the classic love lenders have for owner-occupiers. Problem loans in CRE were usually to parties who had nothing to do with the business. Beyond that, banks are angling for deposit and services business, and an owner-operator is more likely to be in the need for banking services.
- Owners can borrow on equity down the road
- Bull mentions that leases in some cases don’t look as attractive as they once might have. Recent changes in lease accounting rules from FASB means that leases are no longer off a prospective renter’s balance sheet. Buyers don’t face these new rules changes
- Controlling occupation costs, the business environment and creating a great investment property are all common goals in buying
- Bull tells a great story about education magnate Stanley Kaplan and listening to the business advice of accountants