For many businesses, owning your industrial facility is the smartest long-term real estate decision you'll make. Instead of paying rent that increases every year, you build equity, control your occupancy costs, and gain the flexibility to modify your space as needed. This guide covers everything you need to know about purchasing industrial property in Contra Costa and Solano Counties as an owner-user.
Why Buy Instead of Lease?
Owner-occupancy offers compelling advantages that rental never can:
Fixed Occupancy Costs: With a fixed-rate mortgage, your monthly payment stays constant while market rents typically increase 3-5% annually. Over a 10-year period, this creates substantial savings.
Equity Building: Every mortgage payment builds ownership stake. Unlike rent, which provides no return, your monthly payments accumulate value that you can access later through refinancing or sale.
Tax Advantages: Property owners can depreciate the building value over 39 years, deduct mortgage interest, and potentially benefit from 1031 exchanges when selling. Consult your CPA for specifics.
Operational Control: Own your facility and you control modifications, hours of operation, and tenant mix if you have excess space. No landlord approval required.
| Factor | Leasing | Owning |
|---|---|---|
| Monthly Payment | Increases with market | Fixed (with fixed-rate loan) |
| Equity Building | None | Builds over time |
| Upfront Cost | Low (deposit + first month) | Higher (10-25% down) |
| Flexibility to Relocate | Higher (lease term) | Lower (must sell) |
| Modification Freedom | Requires approval | Full control |
Financing Options for Owner-Users
Owner-occupants have access to favorable financing unavailable to pure investors:
SBA 504 Loan
- Down Payment: 10-15%
- Rate: Fixed (below market)
- Term: 20-25 years
- Occupancy: 51%+ required
- Best For: Lowest down payment
SBA 7(a) Loan
- Down Payment: 10-20%
- Rate: Variable or fixed
- Term: Up to 25 years
- Occupancy: 51%+ required
- Best For: Flexibility
Conventional
- Down Payment: 20-25%
- Rate: Fixed or variable
- Term: 5-10 year reset
- Occupancy: No requirement
- Best For: Speed, strong financials
SBA 504: The Owner-User Advantage
The SBA 504 program is specifically designed for owner-occupied commercial real estate. With only 10% down (versus 25% conventional) and below-market fixed rates, it's often the best option for businesses with at least two years of operating history and strong cash flow.
Building Requirements: What to Look For
Building Feature Checklist
- Clear Height: Minimum ceiling height for your racking/equipment
- Loading: Grade-level doors, dock-high positions, drive-in access
- Power: Amperage and phase (three-phase for most equipment)
- HVAC: Warehouse climate control, office air conditioning
- Fire Suppression: Sprinkler system type and coverage
- Floor Load: Capacity for heavy equipment or racking
- Parking: Employee cars, visitor spaces, truck maneuvering
- Zoning: Permitted uses match your operations
The Purchase Process
1. Get Pre-Qualified: Before touring properties, connect with an SBA-preferred lender or commercial mortgage broker. Understand your budget, required down payment, and documentation needs.
2. Define Your Requirements: Size range, location priorities, building features, and timeline. Be realistic about must-haves versus nice-to-haves.
3. Property Search: Your broker will identify on-market listings and proactively contact owners of off-market properties matching your criteria.
4. Make an Offer: Submit a Letter of Intent (LOI) outlining price, terms, contingencies, and timeline. Expect negotiation.
5. Due Diligence: Conduct inspections, review title, assess environmental condition (Phase I required for SBA loans), verify zoning, and finalize financing.
6. Close & Take Ownership: Sign final documents, transfer funds through escrow, and receive keys.
Environmental Due Diligence
All SBA loans require a Phase I Environmental Site Assessment. Even without SBA financing, environmental review protects you from inheriting contamination liability. Budget $2,500-4,000 and 3-4 weeks for this critical step.
Common Mistakes to Avoid
Underestimating Total Costs: Beyond purchase price, budget for closing costs (2-4%), potential tenant improvements, moving expenses, and equipment installation.
Ignoring Future Needs: The building that fits today may not work in three years. Factor in realistic growth projections.
Skipping Professional Inspections: Commercial building inspections cost $1,000-3,000 but can identify roof issues, HVAC problems, or structural concerns.
Rushing the Timeline: SBA loans take 60-90 days to close. Build realistic timelines into your offers.
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