When buying a commercial building as a small business owner often poses a question on whether to invest in a new construction project or renovate an already existing construction. As small business owners are weighing in on their decisions, here are some of the most important things to know when choosing between renovations and new construction projects.
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Renovations are More Cost-efficient
Over the last couple of years, the cost of labor, land, and materials for construction have been on the rise. That is how renovating an existing object is already more cost-efficient at the very start when compared to new construction projects. Moreover, change orders and cost overruns are more likely to happen with new construction projects than with renovations.
New Construction and Financing Advantages
The Small Business Administration offers loans for owner-occupied real estate, creating programs for financing that are attractive to lenders as well as borrowers. Banks are also interested in providing such loans, which means that small businesses can apply for loans to start a new construction project that would be occupied by the project owner, i.e. construction company. The loan usually enables making payments on the interest alone during the process of construction. These financing options can be great opportunities for small business owners who would like to build a showpiece for their business as a part of an ambitious marketing strategy.
Renovations are Faster
Although ground-up projects are more customizable and can be specifically designed to suit the needs of a small business, renovations can also be customized. Renovating is also faster when compared to the time needed for new construction to be completed. Additionally, shortages in construction materials are being reported in the last year, including shortages of building sand, wallboard, and lumber. That is how building construction from scratch may take even longer than expected, even compared to the most demanding renovation plans.
