Should You Buy or Lease a Real Estate Business?

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real-estateWhen starting a business, you have two options for where you operate: you can either rent or buy. There are advantages and disadvantages associated with each, and deciding which one is right for you is totally dependent on the needs of your specific business.

Renting Pro: You Don’t Need as Much Money Up Front

One of the biggest downsides to buying property outright is the fact that you will have to pay a large amount of money upfront as a down payment. Many businesses that are just starting out can’t afford this large down payment, so they find that leasing is a much better option. You can always lease in the meantime until you can afford that initial investment, and then you can buy.

Renting Pro: You Have Room for Growth

If everything goes according to plan, your business will start growing in the near future. When this happens, you’re going to need more space. When you buy property, you’re not really able to expand, but when you lease you can always just leave one property behind to go move into another one where everyone fits.

Buying Pro: You’re Making Money off Your Property

When you’re buying business real estate, that property is probably appreciating in value so that if you ever do want to move, you can make all of your money back in addition to a decent sized profit. You can also pay off the property and then be running your business out of it for virtually free, so that is an advantage that definitely shouldn’t be ignored. Who knows, you may one day be able to lease that property out to another up-and-coming business in the area.

Buying Pro: You Can Anticipate Your Costs

When you’re paying off your building, you know that you’re going to be paying the same amount every month with no surprise fees or raises in price, which is something that can happen frequently when you’re leasing property. Knowing exactly how much you have to pay every month is incredible advantage because it helps you plan out your budget month by month without running into any surprises.

Now that you know a bit about the different options you have when it comes to buying or leasing business real estate, you can make a much more informed decision that aligns with the needs of your business. You are more committed to a single location when you buy, but you’re also making money off the property. On the other hand, you don’t need as much money up front when you rent, but that rent may or may not increase unexpectedly, whereas you wouldn’t run into that problem if you were buying.

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