A manufacturer finances the purchase of the building it already leases with an owner-occupied commercial real estate loan sized to the business's revenue, not to a bank's appetite: a down payment as low as 15 percent instead of the 25 to 30 a bank's standard track asks for, funded in about 28 days instead of 60 to 90, and in most files with a monthly payment that comes in under the lease it replaces. On a $2.8M building, that's $420K down instead of $700K, and the $280K that stays in the business is the difference between buying the plant and watching the landlord sell it to someone else. The building is the collateral. The business's deposits carry the payment. The lender is one that writes owner-occupied industrial every day, which is how it closes in weeks while a bank is still ordering the appraisal.
Here's what it looks like on a real file. A St. Louis manufacturer had rented a 40,000-square-foot plant for years when the owner decided to sell it, with a second buyer waiting and a 30-day deadline. A bank's commercial real estate process runs 60 to 90 days, which would have handed the building to the other buyer. The $1.5M owner-occupied loan funded in 28 days, about $225K down, with zero days of idle production. The manufacturer now owns the floor it runs.
what a manufacturer's purchase of its own leased plant took when the loan was sized to the business's revenue instead of a bank's standard track
— St. Louis manufacturer, $1.5M, 40,000 sq ft, 30-day seller deadline; Dallas distributor, $3.2M, 28 days, payment under the old lease
The Lease Math That Makes the Purchase Obvious
A manufacturer paying $18,500 a month has paid the landlord $2.4M over eleven years and owns nothing. When that landlord offers the building at $2.8M, the question isn't whether the company can afford a $2.8M building. It's whether it can afford to keep renting one.
On an owner-occupied loan with a down payment in the mid-teens, the payment on the purchase usually lands near or under the lease. A Dallas distributor that bought its $3.2M warehouse in 28 days came out about $480 a month under the old lease, with the bank's 25 percent down ($800K) replaced by 15 ($480K), which left $320K in the business. The payment pays down principal instead of someone else's mortgage, the building appreciates on your balance sheet, and the lease renewal that was going to go up every five years stops going up. What it buys you: the same monthly check you were already writing, pointed at an asset you'll own.
Bottom line:
The lease payment and the purchase payment are usually within a few hundred dollars of each other. One of them builds equity. The owner-occupied loan is how a manufacturer gets to the second one without parking a quarter or more of the price in a down payment.
What Sizes the Loan
The building. Owner-occupied means the business runs in it; the lender's collateral is a working plant with a tenant it already knows. Industrial buildings with a going concern inside them are the paper these lenders like most.
The deposits. Four months of business bank statements. The lender wants the payment inside the monthly cash flow with room to spare. A manufacturer that's been paying $18,500 in rent has already proven it can carry the payment, which is why this file moves fast.
Time in business. Two years operating puts you on the standard track; under two is workable on statements when the deposits are strong. Six months is the floor.
The down payment. As low as 15 percent on a general-purpose industrial building with strong deposits. What moves it is the same four things every lender weighs: credit score, debt-to-income, the loan program, and the property type. A special-purpose building or a newer company pushes it up; the number comes on the term sheet the application produces.
What the 10 Points Are Worth
On a $2.8M building, 15 percent down instead of 25 is $280K that stays in the business. That's the CNC line the plant needed anyway, financed separately on the machines. The companies that buy their building and upgrade the floor in the same year didn't have more cash. They just didn't hand it to the down payment.
See what the building funds at on your revenue.
Start Your Funding Request →The Building Is One Layer
Most facility purchases come with a second decision: the plant needs equipment, or the consolidation needs working capital, or both. Each goes to the lender that prices it, on the same application. An Indianapolis manufacturer running three leased spaces across town bought one 40,000-square-foot building and put machining, assembly, and storage under one roof on a $1.2M owner-occupied loan, closed in 30 days; three leases became one note and the daily truck shuttle between sites ended. The equipment for the new floor funds on equipment financing, sized to the machines, and the full purchase price is deductible in year one under Section 179 and bonus depreciation. That's the capital stacking the manufacturing hub is built around.
| File | Building | Down | Funded in | What else was in it |
|---|---|---|---|---|
| St. Louis manufacturer | $1.5M, 40,000 sq ft, the plant it leased | 28 days | 30-day seller deadline, second buyer waiting | |
| Indianapolis manufacturer | $1.2M, 40,000 sq ft, three leases consolidated | Mid-teens | 30 days | Combined revenue across three locations underwrote it |
| Dallas distributor | $3.2M, 25,000 sq ft warehouse | 15% vs the bank's 25% | 28 days | Payment ~$480/mo under the old lease |
When the seller can wait 60 to 90 days, a bank-guaranteed real estate program can be the cheapest money on the building layer and slots in as layer one. When the seller can't, and the one with a second buyer never can, owner-occupied financing on the business's revenue takes that spot in weeks. Model the whole structure in the commercial funding calculator. Manufacturers in Texas and Illinois send us the leased-plant purchase every month.
St. Louis manufacturer buying the 40,000 sq ft plant it leased
Owner-occupied commercial real estate
$1.5M
Funded in 28 days against a 30-day seller deadline; zero days of idle production
See the full case →What to Have Ready
Four months of business bank statements. The purchase contract or the landlord's offer with the price. The last two years of business returns if you have them; under two years, the statements carry it. A list of the equipment if the floor is being upgraded at the same time, so the machine layer can run alongside the building. A commingled account is the one thing that slows it down, so separate personal spending from the business deposits before you apply.
Buy the building before the lease renews
One application, one soft pull. The building funds on the business's revenue; the machines fund on the machines.
Here's What Most People Get Wrong
They take the bank's 25 to 30 percent down as the price of owning the building, and either drain the operating account to pay it or decide they can't afford to buy. Or they wait on a 90-day program while the landlord takes the other offer. Or they buy the building and skip the equipment because the down payment ate the cash. The manufacturers who end up owning their plant financed it on the revenue that was already paying the rent, kept the down payment in the mid-teens, and put the difference on the floor.
Frequently Asked Questions
How much down payment does a manufacturer need to buy its leased building?
As low as 15 percent on an owner-occupied commercial real estate loan sized to the business's revenue, versus 25 to 30 percent on a bank's standard track. On a $2.8M building that's $420K instead of $700K. The exact figure comes on the term sheet and moves with credit score, debt-to-income, loan program, and property type.
How fast can a manufacturing facility purchase close?
About 28 to 30 days from contract to funded on the files above, against a bank's 60 to 90. The St. Louis manufacturer with a 30-day seller deadline and a second buyer waiting funded $1.5M in 28 days.
Will the payment on the building be more than my lease?
Usually not. With a down payment in the mid-teens the purchase payment typically lands near or under the lease it replaces; the Dallas distributor's $3.2M warehouse payment came in about $480 a month under the old lease. The difference is that the payment builds equity instead of paying the landlord's mortgage.
Can I buy the building and upgrade the equipment in the same year?
Yes, and keeping the down payment in the mid-teens instead of the bank's 25 to 30 is what makes it possible. The building funds on an owner-occupied loan sized to the business's revenue; the machines fund on equipment financing sized to the machines; both go on one application. The equipment is deductible in year one under Section 179 and bonus depreciation.
What does a manufacturer need to qualify for a facility loan?
A business that will occupy the building, four months of business bank statements showing the payment fits inside the deposits, two years operating for the standard track (six months is the floor, on statements), and the purchase contract. A manufacturer already paying rent at the building has usually proven the payment.
Is a bank-guaranteed program a better way to buy a manufacturing facility?
When the seller will wait 60 to 90 days, it can be the cheapest money on the real estate layer. Most sellers with a second buyer won't wait, which is why owner-occupied financing on the business's revenue, funded in about 28 days, is the version that actually closes the building.
Bobby's Take
The landlord's offer letter is the best thing that can happen to a manufacturer, and most of them read it as a problem. You've been paying for that building for a decade. The only question is whether the next decade's checks go to a mortgage with your name on it or a landlord's. Keep the down payment in the mid-teens instead of the bank's quarter, close in the 30 days the seller gives you, and put the $280K you didn't hand over into the floor. The manufacturers who own their plant didn't have more money than the ones who rent. They had a lender who sized the loan to the business instead of to the bank's comfort.
