Whether you are starting up, making the move from home-based business to a store front or your lease is about to expire, it’s important to weigh the pros and cons of buying or leasing space for your business.
Here are a few things to take into account;
If you buy space in an upcoming area or at the bottom of a real estate cycle, the property may increase in value in the future. On the other hand, if you lease space and your customers don’t like the location you can ride out the lease then find a better location without losing too much money.
Overhead and Long-term Stability
Mortgage rates have been declining for decades and don’t fluctuate like lease costs do. By owning the space, your business overhead is fixed for the mortgage period.
Leasing costs are affected by improvements to the building, changing real estate values, demand, and other factors. There is also no guarantee you will be able to renew your lease at the end of a lease period.
Do you want to be a property owner/landlord?
If you are leaning towards buying, property taxes, maintenance and repairs, security, parking, insurance, etc… All become your responsibility. An advantage of owning property is the possibility of subletting extra space. However, dealing with tenants can be frustrating and time consuming. When considering buying or renting, you should take into consideration how much extra time can be taken up by being an owner/landlord.
Before making your decision, it is always important to consult the experts. Speak to an experienced realtor, lawyer, mortgage adviser, and your accountant to make sure it is the right choice for your business.