They say money can’t buy happiness…
But it can buy you a good CPA… which is basically the same thing.
Because on a serious note, it’s hard to have peace of mind about your New Hanover County business’s finances if your books aren’t squared away. Your financial reports will be incomplete. You’ll be unable to make accurate forecasts about your cash flow – and what you can and can’t do with expanding your business.
Especially if you’re considering buying a commercial space to house your business. I’m going to get more into that one today, but before I do…
I want to acknowledge the topic crowning the headlines this week and last – tariffs are happening. I’ve got guidance and thoughts about this and will speak more in-depth about it next week. But for now, begin considering where you can pivot in your business to react to possible increased costs.
I’m here not just as a business advisor, but as a strategist in your corner. My aim is to help you run the kind of forward-looking analysis that keeps your business steady in times like this.
One example of this kind of thinking, as you’re looking at what’s best for your business, is considering whether buying a space is the right move for you right now.
Let’s take a look.
Commercial Mortgage Rates: Making the Right Move for Your Wilmington Business
“Risk comes from not knowing what you’re doing.” — Warren Buffett
There was a time when buying a building for your business felt like the natural next step. But with high borrowing costs and economic pressures tightening everyone’s margins, the choice to buy in 2025 requires a lot more calculation than confidence.
Your hesitation about taking on a commercial real estate mortgage is reasonable. Owning commercial property is a big move, and it needs to fit into your broader financial strategy, not just your five-year plan.
Still — owning commercial property isn’t off the table. In fact, for the right business, it can be one of the smartest moves you’ll ever make. The key is understanding what you’re actually getting into. Here are a few things you should be aware of…
Interest rate: Commercial real estate mortgages aren’t like the 30-year, fixed-rate home loans you’re probably familiar with. Traditional loans run anywhere from 6.5 to 12 percent depending on property type, loan term, and borrower qualifications (though most fall in the 7-8 range). SBA loans run higher interest rates: 10-14 percent on variable rates, 12-16 percent on fixed rates.
Loan payments: These loans usually last 5–10 years, but the monthly payment is often calculated using a 20- to 25-year amortization. That means your monthly payment will be significantly higher than it would’ve been just a few years ago — and that directly impacts your cash flow.
At the end of the term, you’ll owe a balloon payment — meaning you either need to refinance or pay off the remaining balance in cash.
Refinancing: Refinancing too early, though? That’ll cost you. Most commercial loans come with a step-down prepayment penalty: 5 percent of the loan if paid off in year one, then dropping to 4 percent, 3 percent, and so on.
And with commercial mortgage rates now hovering between 7 and 9 percent, that penalty stings even more. These rates are higher because, unlike residential mortgages, commercial loans aren’t backed by Fannie Mae or Freddie Mac. Banks carry all the risk — and they price that risk accordingly.
Down payment: This is another shocker. While 3 percent down might get you a house, you’ll likely need 20– 30 percent (or more) for a commercial property. And closing costs can hit 3–5 percent of the loan amount.
What are the strategic benefits?
Despite all that, owning can still be a powerful tool — especially for businesses that are stable, profitable, and ready for long-term positioning. You get control over your space. Protection from rising lease costs. And, of course…
Tax benefits:
– Commercial ownership lets you deduct interest, property taxes, insurance, maintenance, and property management fees.
– You also get depreciation, which spreads the cost of the building over time as a non-cash expense.
– Owning the property also opens the door to estate planning strategies that help you pass wealth to the next generation with major tax advantages.
Consider SBA-backed loans…
If your business is occupying more than 51 percent of the space, SBA 504 or 7(a) loans could offer better terms and more favorable commercial mortgage rates — plus lower down payments and longer amortization.
Don’t rush this decision
This is one of those moments where short-term pressure can lead to long-term pain. If your industry is shrinking, your margins are thin, or your business is in a volatile market, locking into a loan — no matter how attractive the commercial mortgage rate — might not be wise.
But if your business is healthy, growing, and built for the long haul? Ownership could give you the financial foundation to scale without the unpredictability of leasing.
Bottom line: Buying your own commercial property is a huge step for your Wilmington business. We’d be happy to review the financial pieces of such a transaction with you. Schedule a time here:
calendly.com/hayescpapllc
With you in this,
Daniel Hayes