Should You Buy or Lease Commercial Real Estate?
harkins / May 4, 2016
Whether you’re starting a new business or your business is growing, you’ll be moving into a new building. But it’s not as simple as finding a new building you like. You’ll also have to decide whether you want to buy your business’ new home or lease the property. To help you make that decision, here are some questions you should ask yourself when deciding whether to buy or lease commercial real estate.
How long do I plan on being at this spot?
When deciding whether to buy or lease a property, for many the decision is based on which is the better financial decision. The longer you’re going to be in a location, the better off you are buying the property. The tipping point is seven years. If you’ll be at the property for seven years or more, it will be cheaper to buy the property rather than leasing it. However, if you’ll outgrow the property is less than seven years, you’d be better off leasing it.
Can I afford to tie up money in the down payment for a mortgage?
As glamorous as it may seem to think about owning your own property, for a small business owner the mortgage may be too much to handle. Before jumping into owning the property, you should be sure that this is something you can afford without risking the future of the business. If you can’t afford it now, you’d be better off leasing.
Is it better to own my own property or invest in my business?
For many small businesses, there is only so much money to invest. And as much as they may want to own their own property for their business, it may come down to a decision between their dream of owning their property and investing more in their business to help it grow. It’s a decision only that business owner can make.
Do I want to deal with the added hassle of maintaining the property?
One of the advantages of leasing is that the landlord is in charge of the property and therefore must handle much of the maintenance. But if you decide to buy the property, the maintenance is your responsibility. So if you’re considering buying, you’ll have to decide whether you want to carry that added responsibility.
As a business owner, once the business itself has been set up, you’ll need a property to house your company. Just as important as where the property is located is whether you want to buy or lease commercial real estate. These four questions will help you make that decision. If you’re looking into commercial real estate in Central Florida, Harkins Commercial Real Estate can help.
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