It’s no secret purchasing property is a time-tested strategy to help build wealth. Owning commercial real estate provides tax benefits, financial advantages, and other perks buyers can use to make a profit. 

Here’s what you need to know about Owner-Occupied Commercial Real Estate (OOCRE) and how buyers can use this tool to improve cash flow.

What is OOCRE?

OOCRE loans are designed to finance or refinance the purchase of property used solely for the loan holder’s business. This is one of the primary reasons lenders view OOCRE loans as different from investment property financing. Typically, a company must use the majority of a property for its own operations to be eligible for an OOCRE loan.  

What are some common OOCRE property types?

The most common OOCRE properties are:

  1. Retail shops
  2. Office space
  3. Restaurants
  4. Healthcare facilities
  5. Distribution/warehouse facilities

How Can Buyers Benefit From OOCRE?

1. Rent Unused Space.

OOCRE provides business owners with unused space, which can be leased to third-party tenants, helping generate rental income. For example, a food manufacturer may rent out part of its warehouse or commercial kitchen to a meal delivery service. Leveraging the extra space not only provides additional services or amenities but also allows the property owner to receive another source of income.

2. Reduce Overhead Costs.

Owning commercial property can be more cost-efficient than leasing. When you rent space, landlords typically set their lease payments at a rate where they can profit or enhance their cash flow. By owning, you’re less likely to pay that ‘markup’ or deal with increased rent prices during lease renewals since OOCRE loans usually are term loans with a fixed rate and consistent, predictable monthly payment.

3. Build Equity.

With OOCRE, each payment decreases the loan balance and increases your business’s equity (the difference between what you owe and the estimated market value of your business’s assets/properties). In contrast, lease payments don’t generate any long-term equity.

4. Property Value Appreciation.

As property values tend to increase over time, that added appreciation can significantly boost your business’s assets. Should you need to sell the property or your company, the appreciation can translate to additional cash in your pocket.

5. Tax Benefits.

Investing in OOCRE comes with a handful of tax benefits. Commercial owners can benefit by deducting the interest on a commercial real estate loan or writing off other building-related miscellaneous expenses and investments. As always, it’s best to consult with a business tax advisor.  

Financing Options to Purchase Owner Occupied Real Estate

The Small Business Administration (SBA) offers the SBA 504 loan program for commercial real estate acquisition as an alternative to conventional loans. The SBA 504 loan allows small businesses to put less money down and take advantage of fixed interest rates. It makes owning commercial real estate an option for many small businesses that otherwise may not have the opportunity.

Additionally, FirstBank offers OOCRE financing*, which can provide flexibility and opportunities for business growth. Visit to learn more.

*Subject to approval. Other fees and restrictions may apply.

How to Determine if OOCRE Fits Your Business Needs

When considering an OOCRE property for your business, there are several factors to consider. To start:

  1. Assess the property’s location and proximity to your target market, suppliers, and key transportation routes.
  2. Consider whether the property meets your space requirements and allows for the potential expansion of your business.
  3. Once you’ve found the best location for your property, evaluate the condition of the building and any necessary renovations or upgrades needed in the future.

These factors will help you consider if owning the property aligns with your strategic goals. Ultimately, when deciding if an OOCRE is your next business move, seek advice from credited professionals and business advisors.  

For more helpful business tips, visit the Business Success page at

FirstBank determines actual loan qualification only after receipt of a complete loan application and analysis of pertinent information, such as (but not limited to) credit history, income documentation, and property valuation. Subject to approval. Fees and restrictions may apply. See any FirstBank location for complete details.

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