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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.

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.

Keeping your commercial property secure is vital. Installing an effective security system for commercial buildings can give you an extra level of safety and protection. You need to protect not just the premises, but also your staff, equipment, and anything else you have on-site.

It could also be the case that you need to keep your commercial property safe and secure in order to protect the data and information of your clients and customers. Thieves and intruders are smart, and they know how to sniff out a property that hasn’t taken the relative steps for security and protection. Don’t make the error of leaving yourself open to an attack in this way.

Cameras everywhere!

There are so many reasons your commercial building security system should include security cameras. They aren’t overly difficult to install and if you are working with commercial property management companies they are likely to recommend security cameras as your first port of call.

Make sure you don’t have any blind spots, especially entrances or potential areas of risk for a security breach. Installing a network of cameras should be thorough, there’s no point if you aren’t going to cover all angles. As well as cameras working as a great way of identifying any thieves or intruders should the worst happen, they also act as a deterrent. If a burglar sees a wide network of security cameras, they will know that they are at risk of being identified. It adds a huge amount of doubt to those who would otherwise jump at the chance to steal from your commercial property or cause damage. This leads on to the other benefit of cameras; identification. Should the worst happen and a security system is breached then it is at least possible that criminals can be found, identified and charged for any criminal damage.

Motion Floodlights

Motion floodlights can have numerous benefits, also. Obviously, they make it much harder for criminals to hide in the shadows. Working with cameras, it increases the chances they will be identified. On top of this, motion floodlights can help your security staff. If you have a member of staff on-site, motion floodlights can act as an alarm and allow staff to know when something is stirring. They can then know which areas to patrol and where threats may be coming from. Motion floodlights alone won’t be able to make your commercial building security solid, but when combined with other tips, they can become a valuable tool.

Passwords and Passcodes

Traditional locks aren’t likely to be good enough for your security system. Criminals know what they are doing, and intruders will be able to pick locks or gain entrance to the building in some other ways. Creating passwords or passcodes, which can be linked to the door, can create an extra layer of security. This can also reduce the chances of security breaches which can occur due to keys getting stolen or copied.

Another huge benefit of passwords and passcodes is the fact they can be reset and changed. In some high-security buildings, passcodes can be changed each day! This means that only the people who need to be able to access a room or building are able to get in. For instance, if you don’t have a huge amount of valuables on-site, you may still have a cash office or a room where valuables are kept. You can add the extra protection of passwords and passcodes in order to make it so much harder for intruders to get in. These passcodes can also mean that your employees or visitors don’t pose as much of a security threat.

Prepare for an Emergency

You need to have a plan for if the worst should happen and someone tries to break in. Security staff needs to know exactly what is going to happen in this scenario. Also, your day-to-day employees also need to know the protocol, who to inform and what to do in an emergency. The safety of human lives should always be given number one priority. Alarm systems can be an important part of your protocol, should an emergency situation arise.

Some alarms and security systems for commercial buildings can even be set up to automatically notify security firms and even emergency services. It is good practice to create a risk assessment and to think in detail about what you are going to do in an emergency. Sharing this with staff is a good way to ensure you have done your duties when managing a commercial property. If you get a secure system in place, there is no reason it should come to this kind of emergency. The element of deterring potential intruders can be just as important as knowing you have a secure building.

More and more people are investing in real estate properties such as buildings and houses, mostly for rental purposes. However, a lot of property owners doesn’t have enough time for property management. Hence, most of them opt to hire a property manager to operate their estates.

If you are one of these real estate owners who want to hire — or already hired — a property manager, you may have some reservations. It may be your first time, or you had a bad experience with your previous property manager; regardless to say, there are necessary questions you need to ask.

Below are 5 questions to ask your property manager.

1. What is the price formation of renting a property?

Your property manager is responsible for setting up the correct price for your properties. Otherwise, you may lose a supposed revenue if the price was mistakenly assessed. Below should serve as a basis for your property manager when setting the right rental price:

● Checking similar properties. This should help ascertain the right price for your properties. Knowing how much your competitor charge tenants puts you at a competitive level. Your property manager should look at comparables, by checking or viewing properties for rent in your area.

● Considering the neighbor’s leased properties. Another way of charging the right rent is, to look at the leased properties in the same location.

● Newly constructed vs. old property. Prospective tenants prefer to rent a newly constructed building than the old one.

● Views, amenities and square footage are also crucial in adjusting and determining rent. Having a good view, amenities and larger square footage makes it more attractive and desirable to prospective tenants.

2. What are the terms of the Agreement? (This includes the length of the term, renewal of the agreement.)

A lease or rental agreement delineates the rules between landlords and tenants and bound themselves by their rental relationship. It is a contract that includes all the important details agreed upon.

However, you may authorize the property manager to sign for you—in a representative capacity—in the agreement. The terms of the agreement should include, but not limited to:

● Name of tenant
● Occupancy Limit
● Term of the tenancy
● Rent
● Deposits and fees
● Repairs and maintenance
● Restrictions on tenant illegal activity

3. Do you have any references?

The property manager’s past accomplishments are indicative of the services delivered to previous clients. A good property manager always has an aggregate amount of good references. Although, it’s still better to meet and talk with the people with whom the property manager have dealt with.

Since online searches for references are sometimes not reliable. You can ask directly past clients, with whom the property manager had worked with, some good questions to ask are:
● Is the property manager responsive to your queries?
● Does he remit payments on time?
● How often does he give you updates on your property, is it more or less than you prefer?
● Do the quoted prices for repairs and maintenance is similar to what you expect to pay in your area?

4. What factors are taken into consideration when screening tenants?

Your property manager should have various techniques in finding and assessing potential tenants. Aside from considering your personal preferences as the property owner, when screening clients, your property manager should:
● Check tenant’s employment
● Credit standing
● Landlord references
● Criminal records

5. Under what conditions can I cancel my management contract?

You should not sign something that you can’t get away from. If at the onset you spot a potential inescapable contract, then consider it a red flag. If you feel that the service they are giving you is not what you expected, then you should have the freedom to change for a better-suited property manager.

However, there are some requirements for canceling your contract:
● There must be a just cause. It’s included in the contract that you signed with your property manager. Nonobservance of said “just cause” would mean a breach of contract.
● Give the required notice. Prior to the termination of the contract, you should give advance notice to the property manager. The period for giving notice is usually stated in the termination clause of the contract. Most contracts will require between 30 and 90 days notice to terminate a contract.
● Notification must be in writing. You should mail by certified mail, return receipt requested. Just to make sure that the property manager receives it.
● Notify the tenants. Inform them in writing about the change in management. Specifically that you terminated your contract with the current property manager.

When a hurricane or a flood threatens your business, you have more to worry about than your personal safety. The safety of your employees, goods, and your very business also becomes paramount. Flood preparedness is something most small business owners don’t take the time to think about, but it is crucial if you want your business to survive the next natural disaster.

Disaster plans are also useful in man-made crises. Dealing with a water main break in your business is quite similar to handling a flood. Preparing for one helps you prepare for the other.

If you haven’t considered this important subject, we’d like to share with you seven areas to consider that can help you prepare your business for floods and water damage.

Create a Plan

The first thing you need is to create a plan that will ensure the safety of your employees, your building, your cash-on-hand, and any important documentation for your business (e.g. insurance paperwork). These must all be present in order to keep your business running after a disaster. Additionally, you need a method of communicating with your customers to let them know the state of your business and when you will reopen. This plan must be available to managers at your location and practiced regularly. That way, your business will be prepared when the time comes.

Employees

Helping your employees prepare is very similar to the standard procedures any individual would do in an emergency. Your employees should have the gear necessary at work to hear any evacuation instructions and know the escape routes if they are called to do so. If they are ordered to shelter in place, they will need enough food, water, and other essential gear to ride out the situation. Special plans should be made for any employees that must evacuate due to medical conditions regardless of the situation, e.g. diabetics. Consider giving some employees CPR or first aid training. Employees should also have a way to check in with each other so that you can confirm everyone made it through the disaster.

Building

Depending on the property manager, there may not be much you can do to protect your structure. But if you are able to make improvements, here are some things you can do to protect your building during a flood.

• Ensure that your roof-top structures, signs, and any portable vehicles or trailers are braced and secured.
• Make sure all safety gear works, including fire extinguishers and generators. Flooding can cause electricity to do strange things. Know where the shutoffs for your utilities are. It’s a good idea to shut off any gas lines as soon as you know there is a warning.
• If you do have employees shelter in place, have them check for vulnerable areas so they can either deal with it or document it for a later insurance claim.
• If you are computer-dependent, move as much gear as you can to the top floor. At the very least, move your UPS systems. Server rooms have their own disaster recovery needs. If you have one, consult with an IT disaster specialist to create a plan.
• Move any vulnerable inventory to the highest point in your building. If you don’t have multiple floors, consider having sandbags on hand to block the most vulnerable entrances.
• Have procedures for after the flooding for salvage and repairs. Keep a list of contractors in your emergency planning kit to call once the flood has passed. If you don’t own your building, keep the contact information for the property manager.

Cash

While cash may be the last thing on your mind during a disaster, it’s actually quite important. You’ll need to be to pay flood repair specialists for your building as soon as possible after a disaster. You also need to have enough cash to cover payroll expenses, and potentially pay for food, water, or medical supplies for any employees stuck due to the disaster. Don’t let your employees fend for themselves! If necessary, empower one of the employees that stayed in place to make purchasing decisions on your behalf.

Paperwork

Every business has vital paperwork. Insurance policies, business licenses, articles of incorporation, and other fundamental business documents should be kept in a safe place, but should also be accessible after an emergency. You’ll need that information to start filing claims and hiring contractors. Without that paperwork, there’s no way to prove your status. Also, you should examine your insurance paperwork at least once a year to make sure that it still covers what you need. Remember, not all business insurance automatically covers floods!

Communication

As part of your disaster plan, you need to have a method of communicating with other people with an interest in your business. Your clients, customers, contractors, and suppliers must be kept in the loop about the status of your business. It’s good professionalism and it shows that you are on top of the situation. Give them an honest status about what is going on and what you are doing to get your business back in order. They will appreciate the heads-up.

Practice

Finally, you must practice your flood preparation plan. It does no good to leave it gathering dust in a drawer until the time comes. Your business must be ready. Practice it at least twice a year and review it once a year. This will help you find holes in your preparation. Information that might have been correct a year ago may now be out of date. Keep your plan updated!
If you cover these seven domains, your business will be up and running as soon as possible after a major disaster. Don’t neglect to plan!