Buying or leasing a commercial property – a very important step for business owners. This article will help you understand the pros and cons for both buying or leasing a commercial property for you to make the best choice.
BUYING COMMERCIAL PROPERTY : ADVANTAGES
Can Sell the Property
When you buy a commercial property, it becomes your asset, and more likely in the future it would increase its value significantly. Owning means the capital gains will be yours and your making the property the key part of your investment strategy.
Can Control Over Changes
Owning a property gives you the full freedom to make changes- it might be its layout and internal fit out, which can help both increase its value and suitability for your business.
Can Simplify Financial Planning
It makes it easier for you when you own a commercial property when balancing your books. Your loan repayments are at fixed cost, that would allow you to plan for the future.
BUYING COMMERCIAL PROPERTY : DISADVANTAGES
Buying a commercial property is a major investment that requires a significant amount of money to deposit for you to get started. Most of the business owners need a sizable loan to have the property purchased, which is really a big financial commitment.
Finding a property is one of the challenges for businesses, you need to consider not just the now but also for the future when the business grows. For example, if your business grows so quickly, having a small premise may stifle further growth.
If you own your premises, all the costs such as property maintenance, rates and other fees will be shouldered by you. Unlike tenants, in which the landlord is responsible for the most of the property costs.
LEASING A COMMERCIAL PROPERTY: ADVANTAGES
When your business grows quickly, you can have the ability to move into a larger commercial property. A lease provides that agility, as you are not tied to one property or being stuck that may be difficult to sell quickly.
Capital Freed Up
You are free to invest more money in growing your business such as developing new strategies for your business operation like hiring more staff, since you are not tied up in owning a property.
LEASING A COMMERCIAL PROPERTY: DISADVANTAGES
Truly, renting is usually less than paying to own a property, but remember rents do increase over time. Some have little control over what they pay if the landlord chooses to raise the rent significantly at the commencement of a new lease period.
Selling the Property by the Landlord
If the landlord decides to sell the property, you are at the whim of the new owner. The new owner might redevelop the property, or will put in a new tenant that can lead you to look for new premises.
Paying Other’s Mortgage
As the saying goes “rent money is dead money” – it is a philosophy that is somehow true when holding in a commercial property. True, it is better that you pay the asset you own rather than paying someone else’s assets.