One of the many complex decisions that entrepreneurs and real estate investors are facing nowadays is whether to buy or lease a commercial property. Both the options have their own set of advantages and drawbacks but an in-depth review of them will help you make the best decision for your business.
Here is an overview of the factors involved in both leasing and buying your commercial space so that by weighing your company’s needs and expectations effectively you can navigate your decision and will understand what’s best for your business.
Why you should consider buying your business property?
1. Opportunity to build equity:
By buying the property, you have 100% ownership on it right away. It will provide your company with an investment that allows you to build up equity over time as you pay off the mortgage and as the property appreciates in value.
2. Appreciating asset:
Owning commercial real estate means a major portion of the real estate component of your business overhead is fixed for the mortgage period and do not fluctuate like lease costs do.
3. Tax Benefits:
On the basis of several factors, such as how long you have been in business, how profitable your business has been, and what portion of the purchase price or rent relates to the land itself rather than to buildings, the cost of owning a commercial space can offer you additional tax deductions when compared with a lease.
4. Freedom from the landlords:
When you own a property, you have control over it which means you don’t have to negotiate with a landlord if you want to reconfigure the space.
5. Earn while you own:
In case there is any leftover space, you might want to rent it out to tenants and create a secondary income stream.
Why you should consider leasing your business property?
1. Access to prime locations:
Leasing your commercial property gives you the access of more desirable area in comparison which is not the same in case of owner-occupied property. The substantial development of the real estate industry in the prime areas is gradually increasing due to the high value of available buildings.
2. More Flexibility:
You can switch places when the lease is hiked without even selling your property and hence you will have plenty of options when it comes to picking your commercial space.
3. More time to work:
With no hassle of managing the building, leaving the property management and maintenance to the professionals, leasing your office space allows you to focus solely on running your business
4. No Down payment:
When you lease a commercial real estate property, it frees up a lot of capital that you would’ve spent while purchasing a property, and instead allows you to invest in your business or to build out your space. Eventually, you will end up saving money.
When leasing a property, you generally won’t have to pay for any significant maintenance, repairs or upkeep to the property, which can amount to huge unforeseen costs. Hence, you will be able to manage your expenses easily.
Consider all these options before deciding whether to buy or lease your next commercial real estate property.