When choosing commercial property, one of the biggest decisions you’ll have to make is whether to lease or buy property. There are plenty of things to consider when looking at real estate, and here are a few things you should keep in mind.
Reasons to Purchase
Investing in real estate is generally considered a smart move, regardless of whether it is commercial or residential property. There are also a few other reasons to purchase, including:
- Gives you greater control over the property, so you can easily renovate or add new parking spaces
- Allows you to hold onto a great location, since you don’t have to worry about a landlord failing to renew your lease
- Enjoying greater tax savings by writing off depreciation and mortgage interest, which could save your company a great deal of money over time
- More control over your neighbors when owning a multi-tenant facility
- Can be an investment that will appreciate over time, thereby making your business more valuable whenever it’s time to sell
- Provides a sense of community, as you are investing in the area around you
Reasons to Lease
There are definitely some benefits to buying commercial property, but that doesn’t mean it’s the right choice for everyone. Leasing has some advantages as well, a few of which are:
- No need to worry about maintenance, since this responsibility normally falls on the landlord
- Relocating will be much easier to do in the future should you find your current location is too small for your operations
- Simplifies the tax filing process
- Not committing to long-term debt could make it much easier for you to obtain financing for other purposes
- May be easier to negotiate terms, particularly if there is an abundance of commercial rentals in your area
- A lower down payment is normally required when you lease rather than buy
- When making the decision, a cash flow analysis can be an excellent way to determine which one you are better suited for financially.
- A cash flow analysis will account for certain things such as depreciation, income tax rates, closing costs and financing terms, and will better help you compare leasing vs. buying so you can make the right decision.