A Series of Dilemmas

Dear Kim,

I am the Executive Director of a small nonprofit (current budget: $385,000). We have the opportunity to purchase the building we currently occupy. The board and I are trying to figure out all the pros and cons. We have some senior level bank executives telling us that it is not good to get into the real estate business and others saying that it is important to have stability, a home, etc. Some of the issues (good location, room for expansion, fair price) we have already thought through but I am wondering if there are other issues that we need to take into account that we have not yet thought about. The board is well enough connected that I believe the fundraising for the purchase will not prove to be an obstacle – a challenge, certainly, but not an insurmountable one.

—The Old Renter/Buyer Dilemma

 

Dear R and B:

Your question is very thoughtful and you have listed a number of the concerns already. So I will add this: I am pretty firmly in the camp of buying rather than renting if:

1. Your capital campaign to raise money for the purchase of the building will not eat into any of your annual income

2. You intend to stay in the space for at least five years

3. You can reasonably expect that your property will appreciate in value

Just as home ownership is one of the best ways to move into the stability of the middle class, building ownership takes small organizations to a whole new level of financial security. You now have an asset you can use as collateral, you know what you will be paying for your space from now on, and you can fix the building to your specifications. You are not going into the real estate business-it doesn’t even sound like you would have any tenants. You are simply owning the property where you do your work.

I’d say go for it.

Good luck.

—Kim Klein