One of the biggest decisions business owners face – especially when launching a new company or expanding a new location – is whether to lease commercial space for their business or to purchase the property.
For your business, you’ll have to weigh the pros and cons of owning vs leasing commercial space..
Benefits of Leasing a Commercial Space
Frees Up Capital and Resources
One of the best reasons to lease your commercial space is that renting is a lot cheaper than buying.
For small startups on a tight budget, buying their commercial space isn’t even an option.
But even larger operations with larger budgets can benefit by freeing up more capital for operating expenses or for improving the business.
Fewer Costs and Liabilities
Another benefit of leasing vs owning is that you have reduced liability, responsibilities, and costs associated with the property itself.
You pay your rent, and then you let the landlord deal with the rest.
Grounds maintenance, plumbing and electrical repairs, property taxes, and more are all handled by the owner – which frees up more time and money for you to just focus on running your company.
The Easy Exit
If for any reason, you decide to move your business to another location – or even to shut it all down completely – leasing makes it a lot easier to just pull the plug on your commercial space. Once your lease is up, just pack up and move out.
But if you own the property, you might still have a mortgage to pay on that property every month.
And if selling, all that capital is still tied up in the property until the sale is complete and funds are released. If you need to move quickly during a downturn in the market, you could end up losing a lot of potential capital.
Benefits of Owning a Commercial Space
Increase Property Value Over Time
One of the long-term benefits of owning vs leasing your commercial space is that the property itself can increase in value over the years. And once that mortgage is paid off, your cash flow increases immediately.
And you can then sell the property for a large cash sum, funding retirement or company expansion.
More Freedom in Use of Property
When you own your commercial space, you have total freedom to customize it at will. You can even tear down all the structures and rebuild from scratch to fit your needs.
You also don’t have to worry about being forced out once your lease is up.
Additional Potential Income Streams
Some commercial spaces can be split up into multiple units, allowing for several businesses to operate on the same property. If you buy a multi-unit property or have more space than you need, you can create additional revenue streams by renting out to tenants.
Other income streams might include parking lot fees and advertising space.
That increased cash flow can provide more stability to help your own business weather challenging times ahead – or to grow or upgrade as needed.
If you’re considering the pros and cons of leasing vs renting a commercial space for your business, contact Eagle Bend Capital Financing to explore your options and discover which approach will better serve your business needs.