Stop Burning Money on Rent: How to Buy Your Building with Zero Down
Story Time
"I'm not sure we can afford to buy this building."
That's what Brandon told me. He'd been running a law firm for nearly 5 years. Paying $4,000 a month in rent. Every. Single. Month. For a half decade.
I did the math for him. $240,000. That's how much he'd sent to the landlord. Almost a quarter million dollars. Gone. Nothing to show for it except a stack of canceled checks and another lease renewal notice with another increase.
He had a real estate agent he had been working with, showing him some places that would "fit" his budget. But this agent was thinking in terms of conventional loans, not SBA.
"What if I told you that you could buy a building with no money down?"
He laughed. Actually laughed at me.
I don't blame him. It sounds like one of those late-night infomercial scams, or one of the tiktok or instagram influencers touting their grifts. But here's the thing - it's not. It's real. And it's sitting right there in the SBA 7(a) loan program, waiting for business owners to figure it out.
Long story short - Brandon was able to buy a $500,000 building, plus an additional $300,000 in operating costs, with just $10,000 of a down payment. New mortgage payments? Around $4,500 bucks. Slightly more than his previous rent, but now he owns the place (and he got that extra $300k to make the place really work for him).
Here's How the Magic Works
The SBA 7(a) loan lets you finance 100% of a commercial property purchase if you're an existing business. No down payment. Zero. Zilch. Nada.
(Yes, you likely still need about $5,000 to $10,000 for closing costs. But compared to the $200,000+ you'd need for a traditional bank loan? Please. AND, you can recoup some of that when we close)
The requirements aren't even that crazy:
- Your business needs to occupy at least 51% of the building
- You need decent credit (but not perfect - I've seen low 600s get approved)
- Your business needs to show it can handle the payment. We look at historical tax returns, but we can also use projected income in many cases.
That's it. That's the list.
The Part That Makes Me Want to Scream
You know what kills me? The number of business owners who are literally paying MORE in rent than they would for a mortgage payment.
There's an office building for sale near me. 10,000 square feet for right at $1,000,000. Average rents in the area are $20 per foot, so roughly $16,000 per month. If you bought this building for the full $1 million price tage, AND you got the maximum rate of prime + 3%, you'd pay.. $9,500 per month. You'd SAVE $6,500 a month. Every month. Forever.
$78,000 a year back in your pocket. Just by owning instead of renting.
"But What About Interest Rates?"
Yeah, I hear you. Rates aren't what they were in 2021. Prime is sitting at 7.5% as I write this. SBA rates are anywhere from 0.5%-3% above that.
But here's what nobody talks about: When you're renting, you're paying 100% interest. All of it goes to someone else. At least with a mortgage, you're building equity. Even at today's rates, you're better off owning than renting in almost every scenario I've run.
Plus, SBA 7(a) rates are negotiable. I've seen deals close at Prime + 0.5%, though some banks use that as an "intro" rate. Some of my best borrowers are getting Prime + 1-2%. That's still better than paying rent forever. And like the example above, even at the max rate, you're still better off.
The Secret Sauce Nobody Mentions
Here's where it gets really interesting. Some lenders will actually let you borrow MORE than 100%. I'm talking 110%, 120%, even 150% loan-to-value for the right borrower.
Why would they do that? Because they get it. They understand that a business moving from renting to owning needs cash for:
- Moving expenses
- New equipment
- Renovations to customize the space
- Working capital to handle the transition
The Stuff That'll Trip You Up
Look, I'm not going to sugarcoat this. There are some catches.
If you're buying a business AND a building at the same time, you'll need 10% down. The 100% financing only works if you already own the business.
New construction? You'll likely have some more costs our of pocket up front for architects, engineers, permits, etc. All of this can count towards your project, but you'll have to pay for it before the loan actually closes in most cases.
And startups? Forget it. Still need the 10%.
But for existing businesses that are tired of making their landlord rich? This is your golden ticket.
What About SBA 504 Loans?
People always ask about 504 loans for real estate. Here's the deal: They're great. Fixed rates. 10% down. Perfect for straight real estate purchases.
But - and this is a big but - you can't use them for working capital. Can't use them to buy the intangible business assets. Can't roll in some other costs/fees that the 7(a) program allows.
The 7(a) loan is like the Swiss Army knife of SBA loans. Need to buy the building AND some equipment? 7(a). Need to buy out a partner AND get some working capital? 7(a). Want to renovate the whole place after you buy it? Say it with me: 7(a).
The Million Dollar Question
"Why doesn't everyone do this?"
Honestly? Because most people don't know it exists. Banks don't advertise it. Your accountant probably doesn't know about it. Your attorney might vaguely remember something from law school.
But the real reason? Fear.
Fear of debt. Fear of commitment. Fear of owning something.
Meanwhile, they're committed to paying rent forever. They're already in debt to their landlord - they just don't get any equity for it.
That $78,000 a year you saved when buying vs. renting? Use it to hire an associate or two. Grow. Build your wealth instead of building your landlord's wealth. And when you run out of space? Use another SBA loan to buy another location. There's no limit to how many SBA loans you can have out at once (as long as you're not over the total maximum of $5,000,000)
Your Next Move
Stop me if this sounds familiar:
- You wince every time you write that rent check
- You've looked at buildings online at 2 AM
- You've done the math on buying vs. renting (multiple times)
- You keep thinking "maybe next year when things are better"
Things aren't going to get better. Your rent's going up. Again. Your landlord's equity is going up. Again. And you're sitting there, paying for it all.
The building you want is out there. The financing exists. No down payment required.
The only question is: How many more rent checks are you going to write before you do something about it?
Have any of these common questions about SBA financing?
- What credit score do I need for 100% SBA financing? - SBA doesn't have a score limit, but most banks do have internal policy limits. It's mostly about the content of your credit report.
- Do I need to pay an upfront deposit? You don't pay for anything until your loan is pre-approved. If the building ends up not being a fit, or the seller moves on, your deposits can often be switched to a new property or just refunded all together.
- Can I buy a building if I have multiple business locations? - Yes, you could own one and rent the others. Or, use the new location to consolidate operations.
- How long does the SBA loan process take? No longer than any other type of financing, especially when you have the right team. SBA for working capital is around 30 days. Real estate is 45-60 days. Business Acquisitions take 60-90 days.
- What types of buildings qualify for SBA loans? - Any owner occupied commercial real estate. There are some properties that are deemed "special" or "single" purpose, but they are still eligible. They just sometimes come with caveats.
Want to ask something more specific? Text me: 205-922-7227