The roof over a business is fundamental to its growth and success. Over time, business owners will often find themselves at a crossroads, having to reevaluate their needs and determine whether they need a more accommodating facility to operate out of.
If you’re a small business owner facing a similar dilemma, you may be asking yourself: Should I buy or lease commercial real estate?
There are benefits to both leasing vs. purchasing property, and often the decision hinges greatly on your needs and goals as a small business owner.
In this blog article, we’ll explore the benefits of both leasing and buying property. Let’s get started!
Renting property may not offer the same freedom as owning property or the ability to accrue equity; however, the flexibility and benefits of leasing property may better suit your business in both the short-term and long-term future.
As a renter, you’ll avoid the burdens of applying for a commercial real estate loan and a hefty down payment on a property. This will free up your liquidity, help you save money, and give you more freedom to finance your business, which is especially beneficial if you’re just starting out. You’ll also avoid the responsibilities of being a property owner, giving you more time to focus on your business.
Depending on your local real estate market, you may find that there are more commercial properties available to lease in your target vicinity. If your customer base ever grows or if you need to expand, you’ll have the ability to move once your lease is up.
Owning property comes with a lot of responsibilities and costs, but you may find that the freedom and control make it the most rewarding route to take as a small business owner.
As a property owner, you can arrange, remodel, and set up your property however you please (as long as you’re doing so within zoning guidelines and local jurisdiction.) If you plan to keep your business in one location and don’t foresee ever having to move, you’ll stretch your investment for years to come.
Once you purchase real estate, you’ll begin building equity and capital appreciation in the property, adding value to your business in the process. If you buy property in an area with appreciating land value, you can also build value into the property and sell it for more down the line.
Depending on the property you buy, you may be able to rent out extra space and create a secondary source of income, as well. Plus, you can benefit from tax savings every year and even reduce your commercial property taxes.
Leasing vs. Purchasing Property: Which Will You Decide?
When weighing the benefits of leasing vs. purchasing property, a commercial attorney can help you navigate the challenges and make the best decision for your small business.
Whether you decide to lease or purchase property, Hoegen & Associates P.C. can represent you and help you establish the most favorable terms of your decision. Contact us today!