It is a tough call to make when you find the right commercial property that suits your needs, but you are torn in between leasing or buying it. This is so prevalent if you are starting a new business or expanding an existing one. Both options have their pros and cons, and the decision you make depends entirely on your company’s needs and preferences.
How is Buying Different from Leasing?
The two methods of acquiring commercial property are very distinct. Buying means that you have to pay for the property upfront with cash or get it with loan proceeds. Once you have cleared the loan, then you will own the property outright. On the flip side, leasing means renting the property from the owner, whereby the rental agreement can be long-term or short-term. When you lease property, you are more of a tenant than an owner. However, you can have a lease-to-own agreement that puts you on the path to ownership.
Pros and Cons of Buying Business Space
A platform to build equity
You can lease part of the space to generate additional income
Freedom to customize the property
Fixed mortgage payments
The property’s value increases with time
Not flexible – if your business grows, you might be required to buy or lease another office space.
Upfront down payments are required
You are responsible for repairs and maintenance
Incurring late loan repayment penalties
Pros and Cons of Leasing Office Space
Flexibility – once your lease term is over, you can decide to move out or renew the agreement
No upfront down payments are required.
Leasing is less expensive, which can give you an opportunity to get excellent property in a competitive real estate market.
The owner takes care of any necessary repairs and maintenance
Fixed monthly payments
No equity accumulation
You have no control over the space
You don’t get a chance to make additional income
In some areas, the rent for a leased property may be higher than the average monthly mortgage costs.
As a businessman, whether you are starting or expanding an existing company, it may be overwhelming for you to decide whether to buy or lease office space. Understand the pros and cons of each option to make an informed decision. Contact Emerald Valley Financial Services today to get all the financial help you might require.