Is It Better to Lease or Buy Commercial Premises?
As a consequence of the boom the real estate market has enjoyed in recent years, some entrepreneurs have been reluctant to acquire a commercial space; however, depending on a business owner’s particular situation, buying may be preferable.
Are you looking for a place of business that fulfills your professional requirements, but are unclear if you should buy or lease? The decision you reach will be determined by your specific needs and your financial situation.
The Advantages of Leasing Commercial Premises
Is your business just getting off the ground and you are uncertain about its future? Does the business have limited working capital? Are you considering moving your operations in a few years? These are all good reason to lease instead of purchase your commercial space!
In fact, being a commercial tenant will offer you more flexibility. You will also have fewer responsibilities as you will have a landlord to rely on for any needed repairs and won’t have to spend large sums of money on building maintenance. If you want to be able to focus all your energy on growing your business, leasing is certainly the best choice.
However, the money you pay for rent does go into someone else’s pocket. You won’t make it back when you leave. But at least in this case, you won’t have to hunt for a buyer if your activities force you to relocate on short notice! Before signing a lease agreement, find out if there are any restrictions, such as not being authorized to modify the space for a different use.
The Advantages of Buying Commercial Premises
Is your company well established? Does it have lots of working capital on hand? Have you discovered the ideal space, in the perfect spot to maximize revenue? You are no doubt aware that finding well-located commercial premises is no simple task. So, if you do uncover such a gem and it corresponds to your needs as well as your budget, snap it up! In this case, buying a commercial property is probably the better choice.
You can then work to increase its market value over the years by making improvements, for example. You may eventually earn a profit when you resell it. Purchasing a place of business can therefore be considered an investment. All the more so if you have unused space that you can rent for some extra income, allowing you to pay back your mortgage even faster.
Nevertheless, be aware that substantial funds are needed to acquire a commercial space: this transaction will require a downpayment of tens of thousands of dollars. Keep in mind as well that as a property owner, you will be responsible for managing and maintaining the commercial building, which you would not have to do if you were a tenant.
As you can see, there are cases where one option is preferable to the other, and the choice really depends on your financial situation and how stable your business is. When it comes to determining if you wish to lease or buy a commercial space or building, taking the time to consider your needs carefully will help you reach to a well-informed decision. As will talking to a RE/MAX affiliated commercial real estate broker!
