Acquiring the Real Estate Where You Work

Paul Neal is a serial entrepreneur, having owned six businesses over the course of his career. He has watched entrepreneurs trying to fund a business acquisition or real estate of any type go to a local bank. But his experience says otherwise.?

That is why his company, Vantage Point Commercial Capital , provides alternative sources and acts like a “funding concierge,” partnering with the business owner / investor / professional to help understand what they are trying to accomplish, both short term and long-term, and helps them make the right choice.

“Because we know the market, we know where the money is, and try to help them make the right choice,” said Paul.

One major advice he tries to coach business owners on is to acquire the real estate where their business is located. This helps them invest in themselves, rather than paying a landlord.

“One of the areas that we see that people trip over all the time, and just don't even think they can go there is on the owner occupied commercial space,” he said.?

“We hear a lot about investment, real estate, and building your portfolio,” he said. “That's all very good, but in addition to that, if you're a professional who has to have a local presence, – for instance, your local contractor, you've got employees, maybe you have a small trucking company or you’re a veterinarian or something like that – and so you're renting your building, you're leasing it out, and you're paying thousands of dollars out the window. You're foregoing a lot of the benefits of owning that space, which are many.”?

“There’s the lien, the tax advantages, the leverage, the ability to maybe lease part of the building out to help defer the cost so somebody else can pay your freight,” said Paul. “And not only that, your business is worth more when you go to sell real estate changes to transactions. It adds more value to the whole business piece versus just a customer base and blue sky.”?

Paul says that his company, Vantage Point Commercial Capital, is also well-positioned to help business owners get a better deal than they would at a local bank.?

“Most people think because they work with a local bank, that it's going to be a very large down payment,” he said. “Typically, if you go to a bank, they're gonna want 20 to 25% down. And so if you buy a building that, we’ll just say a million dollar building or a $2 million building, that's a pretty good chunk of change – $200,000 to $400,000 worth of cash, that you basically have to take off the table as you’re operating capital, or out of other investments, to put into the business.”?

“In many cases, that's the impediment from a payment standpoint, generally speaking,” said Paul. “We've sourced deals as low as zero down payment. Most cases, we're in the 5 to 15%.”?

Paul gave an example of a client who bought a building because he was in a “defensive situation.” That client owns a restaurant, which was located in the same building for five or six years. But, due to a lot of things, including COVID and other issues, the landlord was selling – but was giving him first right of refusal so that the new landlord didn’t have the ability to kick him out. The restaurant owner just closed on the building.

In this situation, owning the building gave that business owner more control of their business – and for a restaurant, location is sometimes everything.?

Paul and his team serve businesses all over the country. One of the consistent things he finds is that new real estate investors should get a mentor.

“Find someone who's done it before you that you can listen to who will help you avoid the minefields because there are a lot of them out there,” he said.?

That seems to be the same role he and his team at VPC take as they serve fellow entrepreneurs, helping them to invest in their own commercial real estate rather than give up control of their own business location and put that capital investment into someone else’s pocket.

To watch or listen to Dan Lesniak’s full conversation with Paul Neal, check out Episode 394 of the HyperFast Agent podcast.