There are many benefits to buying commercial property. For one thing, the real estate then becomes a significant asset that your business owns. If you move to another location in the future, you can sell this real estate, and the value may be much higher than what you paid for it initially.
However, not all businesses are in this position. Many owners decide to lease. What are some of the reasons that they do this?
Freeing up money for other uses
One reason can be if it’s a new business and money is relatively tight. Spending all of the money on a down payment or a real estate purchase could hold the business back. Leasing does create a monthly obligation, but it frees up capital to help grow the business in other ways.
You need to move very quickly
Some business owners are looking to get into a new building in the next month or two. It can take a long time to go through an entire purchase transaction, and then the building may need to be renovated. Leasing is a much faster way to get necessary real estate.
You’re not as committed
Many commercial leases are just for 3 to 5 years. If the business doesn’t work out or if you find that the location isn’t optimal, you’re not committed to staying long-term.
The business may grow
Additionally, if your business is stable and remains the same size, you may be able to stay in the same real estate long-term. But if the business is actively growing, you’re aware that you could quickly outgrow any building that you purchase. In this sense, leasing may be a better option because you can upgrade to another property after a few years.
Whether you decide to lease or buy, be sure you are well aware of all the legal steps you’ll need to take.
