You should extensively understand what it means to purchase or rent a commercial property before choosing to go down either path. When you purchase a commercial property, you’re buying it from a seller using loan or cash proceeds. Upon paying off the loan, you can then own your property outright.
Leasing of commercial property, on the other hand, implies that you’re renting the property from the owner. Leasing can be long term or short-term basis. When you rent commercial property, you become a tenant instead of the property owner. However, leasing is a good plan because it puts you on the roadmap to owning the property.
Factors to Explore When Deciding Whether to Lease or Buy Commercial Property
The factors below, if appropriate to your circumstance, may trigger you in arriving at an informed decision concerning buying or leasing commercial property.
You Want to Manage the Commercial Property
Let’s say you desire to renovate or do some significant additions to the property. Or you want to alter the working hours for your business or change the general activities of your business. If you rent commercial property, you may need a go-ahead from your landlord to execute such changes. But when you buy the property, you’ll not need the approval of anyone, to make the adjustments.
Look into The Long-Term Cost
Leased property in its early years may beat out a bought property regarding cash flow. However, in the long run, buying a commercial property is often cheaper since the owner, other than paying all the costs involved in the acquisition and maintenance of the property will also generate for himself. You can evade paying the profit premium to the rent commercial property by purchasing the property rather than leasing the commercial property.
You Reside in A Location Where Land is Appreciating in Value
If you plan to shift to a new location where you believe that the land value will continue to shoot, it’s advisable to buy the property to enjoy the profit accrued from land appreciation. This will do you good if you can spot the trend in real estate before the rise in the price of land.
Buying Commercial Property May Earn You Tax Savings
Purchasing a commercial property will help you cut on your tax bill, which is not the case when you lease the property.
You Fear Maintenance Duties
If you hate the hassle of maintaining the duty of property, then you should only rent a commercial property and leave for the landlord to handle the rest. Maintenance hassles that may trouble you include progressive structural quality of the property such as repairing the roofs, heating effects, periodic maintenance, maintenance of electric, cooling, and plumbing equipment.
You Need to Preserve Your Mobility
If you’re unsure whether the property you choose to buy today may be in a position to serve your future needs as you expect, the only decision may be just to rent a commercial property. This allows you mobility up to the time when you’ll feel that the property of your choice is ready for purchase.
