--- title: How to avoid real estate traps when buying a business [cartoon] description: JPAbusiness managing director James Price explains how to avoid common real estate traps when buying a business. image: https://blog.jpabusiness.com.au/hubfs/Other_Images/Blog_Images/jpa08.jpg --- 16 October 2018 # How to avoid real estate traps when buying a business [cartoon] WRITTEN BYJames Price | JPAbusiness ![jpa08.jpg](https://blog.jpabusiness.com.au/hs-fs/hubfs/Other_Images/Blog_Images/jpa08.jpg?width=638&height=426&name=jpa08.jpg) Businesses – particularly family businesses – often use **real estate assets as part of their wealth generation strategy.** This may lead to situations where the business and real estate assets are interdependent, **creating complexities when it comes time to exit** and establish a [fair market valuation](https://www.jpabusiness.com.au/business-valuations). For example: - A business may be sold with the intention of paying off a real estate loan. Whatever the vendor’s requirements, however, the loan value should not affect the value of the business. - A business which operates from its own premises may charge the business rent above or below market rate. This can distort the financial results of the underlying business. When looking to [buy](https://www.jpabusiness.com.au/business-transactions/buying-a-business) or [sell a business](https://www.jpabusiness.com.au/business-transactions/selling-a-business), make sure you have an experienced business advisor who can **ensure the effects of real estate ownership are reflected in the sale terms and conditions** negotiated.  [![New Call-to-action](https://hubspot-no-cache-ap1-prod.s3.amazonaws.com/cta/default/2108706/cac317e1-a652-4174-a108-45c044209b89.png)](https://hubspot-cta-redirect-ap1-prod.s3.amazonaws.com/cta/redirect/2108706/cac317e1-a652-4174-a108-45c044209b89) We have created a number of free resources to help our clients and subscribers when buying businesses: - [Buying a Business Planning Sheet](https://landing.jpabusiness.com.au/buying-a-business-planning-sheet-download) - [Due Diligence Checklist](https://landing.jpabusiness.com.au/due-diligence-checklist) - [Buying a Franchise Planning Sheet](https://landing.jpabusiness.com.au/buying-a-franchise-planning-sheet-download) - [How to conduct due diligence on a business purchase eBook](https://landing.jpabusiness.com.au/how-to-conduct-due-diligence-ebook) - [Business Buyer's Checklist](https://landing.jpabusiness.com.au/business-buyers-checklist-download-0-0) You can find more resources for buying, selling and managing businesses in our online Resource Library. [![JPAbusiness Resource Library](https://hubspot-no-cache-ap1-prod.s3.amazonaws.com/cta/default/2108706/ed9d830c-33e8-465c-9284-1e513d85d518.png)](https://hubspot-cta-redirect-ap1-prod.s3.amazonaws.com/cta/redirect/2108706/ed9d830c-33e8-465c-9284-1e513d85d518)   If you would like advice or support regarding any aspect of buying or selling a business, [contact the JPAbusiness team](https://landing.jpabusiness.com.au/contactus) on **02 6360 0360** for a confidential, initial discussion.   ![JAMES PRICE | JPAbusiness](https://blog.jpabusiness.com.au/hs-fs/hubfs/JPAbusiness_Files/james_in_a_circle.png?width=90&name=james_in_a_circle.png "JAMES PRICE | JPAbusiness")James Price has over 30 years' experience in providing strategic, commercial and financial advice to Australian and international business clients. James' blogs provide business advice for aspiring and current small to mid-sized business owners, operators and managers.   Share this Article Share this blog post on Twitter [mailto:?subject=Share%20this%20blog%20post&body=https://blog.jpabusiness.com.au/blog/how-to-avoid-real-estate-traps-when-buying-a-business-cartoon](mailto:?subject=Share%20this%20blog%20post&body=https://blog.jpabusiness.com.au/blog/how-to-avoid-real-estate-traps-when-buying-a-business-cartoon) Copied to clipboard Topics - [business value ](https://blog.jpabusiness.com.au/blog/topic/business-value) - [buying a business ](https://blog.jpabusiness.com.au/blog/topic/buying-a-business) - [selling your business ](https://blog.jpabusiness.com.au/blog/topic/selling-your-business) - [valuations ](https://blog.jpabusiness.com.au/blog/topic/valuations) - [family business ](https://blog.jpabusiness.com.au/blog/topic/family-business) - [starting a business ](https://blog.jpabusiness.com.au/blog/topic/starting-a-business) #### Related Blog Posts ### [Family business on agenda in Japan [blog]](https://blog.jpabusiness.com.au/blog/family-business-on-agenda-in-japan-blog) Read more ### [Do business buyers still pay for goodwill?](https://blog.jpabusiness.com.au/blog/do-business-buyers-still-pay-for-goodwill) Goodwill is an intangible value associated with a business and is based on the ... [Read more ](https://blog.jpabusiness.com.au/blog/do-business-buyers-still-pay-for-goodwill) ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "James Price | JPAbusiness", "url" : "https://blog.jpabusiness.com.au/blog/author/james-price-jpabusiness" }, "datePublished" : "2018-10-16T15:00:00.000Z", "headline" : "How to avoid real estate traps when buying a business [cartoon]", "image" : [ "https://blog.jpabusiness.com.au/hubfs/Other_Images/Blog_Images/jpa08.jpg" ], "mainEntityOfPage" : { "@id" : "https://blog.jpabusiness.com.au/blog/how-to-avoid-real-estate-traps-when-buying-a-business-cartoon", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://blog.jpabusiness.com.au/hubfs/JPAbusiness-logo.svg" }, "name" : "JPAbusiness Pty Ltd" } } ```