When Should the MBE/DBE Look to Invest in Real Estate

by Michael Brito

Own or lease? This is usually the question on everyone’s mind when the topic of additional space arises. I say “additional space” because this question isn’t typically the initial one when we start-up. Here’s what happens when one of two things occur; expansion dictates the need for additional area or the location is now up for renewal therefore purchasing conversations begin. At any rate, we need to be ready to answer some very relevant questions. Ask the following, and be honest with yourself as I’ve mentioned in past articles, fooling yourself will only harm your company so use an informed consultant here.
1. Am I properly positioned (financially and emotionally) to take on this next step? Talk to your financial advisor, your banker and your partner – in business and your partner at home.

2. Is this location where I want to be, is it the best location for my company’s future? Look at your five and ten year outlook. Be sure this location will afford you the best exposure as well as opportunity.

3. Have I done a proper market analysis to show me the best ROI should I choose to sell? By all means consult with an independent agent -independent of the potential deal!

4. Does it provide room for expansion in the future? Refer back to your future goals and expand on them. Research local codes, neighboring structures and potential permitting issues you may encounter. Be sure the changes in your goals fits the site you are looking into.

5. Has my insurance agent assessed the additional risk and advised me? Assessing risk is self-explanatory but often times we missed the simplest steps which could be detrimental to a business.

6. Are there other tenants in the building presently? Do I want to take on the role of landlord? Accepting the role as landlord will most definitely add a burden to the smaller enterprise and you must be able to handle it!

7. Are there any liens or tax holds on the property? Using a trusted closing attorney that will do a thorough review so you’re not blindsided later on is extremely important. Old debt is an anchor, more so when it’s not your own!

8. Should the company look into property acquisition and build and am I able to handle such a project or do I have the knowledge/time? If you have no experience in this area, stay clear if you can’t afford to contract out the responsibility.
These are just a few questions when considering the lease or purchase conundrum regarding your business expansion questions. When focusing on the minority business community regarding real-estate, things get interesting! Consider the available agencies in our little state of Rhode Island that exist to mentor, guide and coach us through the process of growth and generally doing what we do.
These same groups are there to assist us in the area of real estate advice/acquisition so reach out and just in case you’re not aware of them, I’m here to help…
Michael Brito Team Member, Managing the Road Ahead www.managetheroadahead.com

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