Which is better: Leasing or buying commercial property? The short answer is that it depends on your situation.
For a brand-new start-up, taking out a long-term commercial loan might not be the right decision. On the other hand, a well-established business that has been paying rent for several years may be in the perfect place to finally make a purchase.
Owning commercial real estate has pros and cons. A great first step is to connect with an experienced agent to discuss your strategy.
Leasing Commercial Real Estate
Here are some reasons it might make sense to lease commercial real estate space:
- No Financing: Qualifying for financing to purchase commercial property can be a pain if your business has other substantial expenses. Leasing avoids any difficulties in acquiring a loan.
- Less Responsibility: Depending on the type of lease, your landlord will be in charge of any major issues that arise with the building, leaving you to focus on essential business activities.
- Smaller Up-Front Fees: While there may be a deposit at the start of a lease, you won’t have to stress about saving for a substantial down payment.
- Flexibility: Although commercial real estate leases are generally longer than residential, you still have significantly more flexibility to move spaces without selling property.
Owning Commercial Real Estate
If you are ready to purchase commercial property for your business, here are some benefits you will enjoy:
- Equity: When you own commercial real estate, your payments come back to you in the form of equity over time rather than going straight into your landlord’s pocket.
- Appreciation: Desirable commercial property in great areas tends to appreciate over time. Not only will you be paying down your loan, but you will also get the added return of higher property values when it comes time to sell.
- Control: Rather than being tethered to rules outlined in a lease, you have complete control over the property and other tenants.
- Steady Payments: Lease amounts tend to increase over time. If you own commercial property, however, you can secure a loan with fixed payments over the term.
- Income Potential: Besides having space for your business to operate, there is also income potential in renting out unused portions of the building.
- Tax Benefits: When you own commercial property, strategies such as depreciation and interest deductions can be used to reduce your tax liability.
Your Business, Your Choice
Ultimately, it is your business, and you have to make the right choice for your situation. If you have questions about leasing or purchasing commercial real estate, please contact Steve Longenecker and Northern Colorado Commercial Real Estate at WeBrokerCORealEstate or 720-600-9513.
We give out $250 gift cards for referrals that become our real estate clients.
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