buying vs leasing

Buy or Rent a Commercial Property – The Pros and Cons

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If your business has reached a stage of growth where you need to move into a new commercial property then you probably have a lot of questions on buying vs leasing. The truth is there are good things and bad things about buying a building for your business and leasing a building for a business.

The decision you make will probably end up being informed by the type of business you’re running, how much space you need, how much money you have available to you, and a lot of other factors that will need to be considered. To help arm you with all the information you could need when moving into a property for your business, deciding whether or not to rent or buy!

Benefits Of Buying Commercial Real Estate

A lot of people instantly want to buy commercial real estate rather than work with a property management company on leasing. Buying a building for small businesses certainly feels like a seminal point in your business career. However, it isn’t all about buying, as we’ll explore later. The benefits of buying are clear:

  • You will own the building and can resell it in the future, which means it may not cost you anything other than the loans you have had to take out to buy the real estate.
  • The real estate might actually increase in value. It is possible that you might make a profit out of the building as you are adding an asset in financial terms.
  • Stability is another benefit. You aren’t relying on a landlord or someone who owns the business to tell you that you are able to tay for years!
  • Side incomes such as using different parts of the space to rent out to other businesses for storage or other uses can bring in an income, you may have car parking spaces you can rent out.

Buying vs leasing is a move for long term stability and not having to rely on anyone else. This has a nice feel for a lot of businesses, people love the idea of their own property that they can use for years to come. It could be the start of a business empire. However, leasing is an alternative that isn’t to be ignored.

buying property

Benefits of Leasing Commercial Real Estate

There are a number of advantages to leasing real estate. A huge number of businesses prefer leasing for a number of reasons. Leasing a building for a business is common practice. The benefits of a lease over a purchase include:

  • A lease leaves more capital for other things. You will be paying monthly instead of paying one big lump sum.
  • A lot can be dealt with for you by a property management company. The business premises will actually be ready to house your staff or business whereas a property you buy may need to be fully kitted out.
  • There’s more out there. You’ll find there to be more choice on the leasing market as opposed to the buying market in the vast majority of cases. There are a lot of companies ready to lease you commercial property, less out there to be purchased outright.
  • You have more flexibility to move. You can let the contract on a lease run out and move to another, bigger property as your business grows. Or, if the worst happens and you go out of business, you can get out of a lease more easily than selling a whole property.

Tax Advantages

The tax advantages vary depending on where in the world you are, but leasing can often be a lot simpler. It gives one simple and effective expense to go on your accounts rather than leaving your accountant with assets and more complicated books come the end of the tax year.

Cost Efficiency

Think about the cost-efficiency of buying a building for your business against renting. If owning the building is likely to make you an extra side income, you could potentially find it more cost-efficient. Actually, though, owning the building can cost more.

Liabilities

This is something else that can vary, but you may have to pay business rates, or property maintenance and other legal fees associated with buying. Leasing doesn’t tend to come with these same liabilities. Working with a management company can take a lot of the worries away, and they may even be able to help with things like insurance and the other learning curves that are a big part of running a business in a physical location. You might be liable for the people spending time within that property.

There’s plenty to consider in the rent vs buy debate, it will largely depend on whether you want an asset that is fixed and long term or short term and flexible.

Commercial Property

How to Find the Right Commercial Property Owner for Your Business

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Opening a business and leasing a commercial property can be a very exciting time. It is also a time when it is vital to make the right decisions. It’s easy to get over-excited and this can lead to you making decisions that aren’t actually the best thing for your business. Looking to find a commercial property owner to work with, whether you’re buying premises from them or leasing, can be tricky.

It’s vital that you consider certain things before you take the plunge. You can get tied into a contract and it could be very frustrating if you find a commercial property owner to buy from and then something better comes up a few weeks later.

Location

Location can be utterly vital to a business. This is especially true if you need to rely on footfall for the business itself. If you are running a business people search online for first like a car dealership or a repair store, this might not be such an issue. If you’re starting a coffee shop, a lot of your business will be people stopping by when they see your store and fancy a coffee.
The more central your location in a town or city, the better for eyeballs seeing you. Remember that it will be more expensive per square meter though, so don’t expect to run an auto dealership in the middle of a city.

Space

Always establish how much space you need before you move into a commercial property. This is a vital part of knowing how to buy commercial property for business, working out a rough floor plan of how you are going to run your business can be very important. It’s a great way to work out the floor space you are going to require.

Costs

You’re likely to already have the model of the budget in mind when looking for a commercial property. However, it isn’t just a case of how much you will be spending upfront. Bills can be more expensive based on the size of a commercial property. There are also costs associated with running a business and maintaining it. For instance, Las Vegas Commercial Property Management can run a building for you in the Las Vegas area.

The costs of running a commercial property can make the difference between profit and loss, so it is definitely worth taking the time to research and plan the costs that may be associated with the business. Estimate bills, and check if there are business rates payable in the area. Once you find a commercial property owner to deal with you might want to ask them about these costs.

ROI (Return on Investment)

Think about whether you can realistically make a profit in the location. It is easy to fall in love, but if you are using a commercial property then you need to be able to make a profit. Whether you are renting out space, or plan to sell it in the future, there needs to be a potential ROI. Like a residential property, if you buy it in a run-down shape and improve the space then there’s a potential to make money on the property itself

Transport

Is the property easy to reach? Is there public transport nearby to stop people from having to make a specific trip to get to the property. A lot of businesses rely on impulse buys or purchasing from shops that are convenient. Think of it this way, if you’re running a convenience store in a train station, it’s likely to do a lot better than if you’re running one out of town.

Also, if people have to make a trip to see your business specifically, transport will be important. Is your business easy to reach? Is the commercial property near other things people might be visiting?

Closing Time

Though things like licensing might come into consideration, it could also be that the closing time is limited. For instance, if you are looking for a commercial property in a mall, you might be limited to the opening times of the mall itself. Similarly, if you’re near somewhere residential there could be restrictions about when you are allowed to open.

A lot of the factors regarding how to buy commercial property for business are based on location. You should be aware of restrictions in the local area, having a good idea of what the area is like, the layout, and local laws can help you to make the right decision.