As a small business owner, it can be very challenging to grow your business, remain profitable, and maintain a balance in life with your family. Some property managers can manage 50-100 properties without the need of a full time employee or commercial office.  However, once the portfolio exceeds 100 units, an owner needs to consider hiring an employee and opening a commercial office.

One of the best decisions I ever made was to purchase an office condo. As a property manager and landlord, I don’t mind having mortgage debt as long as someone else pays the mortgage. Why not apply the same concept with a commercial office.

I own two separate commercial office condos that are about 1,000 sqft. each. We sublease 50% of the space to our mortgage broker, attorney, and real estate sales agents.  Our office condo has a dedicated conference room, and a shared reception area, bathroom, and kitchen. Our tenants use the conference room by appointment, and we offer free usage of our fax machine, printer, and digital scanner/sender. Hi-speed internet is included, and our tenants setup a separate phone line or VOIP system through our internet connection. Our phone system also supports multiple companies with separate business lines offering full voice mail and voice attendant.

The monthly cost of renting an office will vary in cost depending on location and your local market. Renting an equivalent office in our market would cost $1,500-$2,000 per month after paying rent, internet, phone lines, and utilities. If the lease is a triple net lease requiring you to pay property taxes, it can be even more costly.

There is a huge demand for small business owners needing to lease a small commercial suite to conduct business or meet customers. Many small businesses can’t afford the overhead cost of leasing a larger office. Many businesses compliment a property management firm. Consider subleasing to a real estate attorney, sales agent who works with an investment group, insurance agent, mortgage broker, or contractor.

Renting office suites to small business owners is extremely profitable. We rent each suite for $400-$500 per month. Both office condos cash flow several hundred dollars each. Not only does this give me a free office, but I plan to use the yearly cash flow to payoff the mortgages within 10 years.

If you partner and sublease with a small business owner, consider sharing employee costs.  You may be able to cross train a receptionist or assistant to help you and your tenant partner. This can reduce your overhead cost, until your business grows enough to support the cost of a full time employee.

My business has grown, and I now have several employees. Leveraging my office condo helped me manage my overhead and make the transition from a home office to commercial space much easier. I still work at home, but my staff members answer calls, draft leases, and handle all maintenance and accounting, etc. This has provided the best balance for my business. Now, I can actually take a vacation. Before I had an office and a team of resources, it was impossible to take a vacation.

Owning your commercial can make your business more profitable, if you sell your business in the future. You could package the business and office together for sale, or sell the business only and keep the office and lease to new owner. Both scenarios are attractive offerings to a future buyer.

I encourage property managers to consider making the investment to purchase an owner occupied office and sublease to business professionals. Not only can you have a free office, you may generate business leads from your business tenant relationships.