As a business owner, you’ll know that the economy is always fluctuating and shifting. Considering this, big financial decisions like acquiring commercial property are obviously important to think about. This applies not only to the up-front costs, but also the long-term future of the property. One of the first things you’ll need to consider is whether to buy or lease. Here are some points to consider before going ahead to either buy or lease a property for your business.
When you’re buying a property, it isn’t as simple as making a transfer and then moving in all your equipment. You’ll need to deal with a chain of legal, administrative and financial charges that come with the package.
A pretty big deposit is another typical cost to worry about. While there are certainly advantages in owning a commercial property, if you want a cheaper and simpler option I’d recommend leasing. When you’ find a good office space for rent, all you have to do is put down a couple of months’ rent, and possibly a deposit.
When you’re looking for a new commercial property, the future success of your business is another important matter you need to mull over. Many small business owners buy their first commercial property, then out-grow it much faster than the expected, and live to regret the decision.
If you go through some rapid growth and need to move out of the property, then you certainly want to be in a tenant’s position. Usually, all you have to do is run down the lease, or negotiate with the property owner in order to arrange an early termination.
On the other hand, when you need to move out of a building you own, you have to either organise a sale or find a tenant, all the while searching for new premises. This can seriously eat into your time for running your business, and therefore your profits!
On the other hand, if you think growth isn’t too likely, it’s usually better to buy. When you’re under-occupying a rented space you’re pouring money down the drain. When you own it, you can simply rent out one or two offices and expand if and when you need to.
The maintenance of the building is another big thing to consider when you’re weighing up whether to buy or rent. The owner of the building will be responsible for the upkeep and repairs the property may need as time goes on. Having to fork out on this at the wrong time can mean a seriously damaging blow to your profit margins.
When you’re renting one or two offices on the other hand, you may only have to pay a service charge, or maintain one small part of the building. Of course, when problems strike it can still be a massive obstacle to work your way around. Furthermore, you won’t be able to wave away all responsibility just by choosing to lease. It all depends on the fine print in the rental agreement.