Should You Buy Or Lease A Commercial Real Estate Property?

If your business has expanded to the point where you need to move into a commercial real estate building to continue to grow, you might be wondering one important thing: should you buy or lease the property? Each option has its pros and cons, and you must decide whether leasing or buying is more beneficial for your business in the long run.

Should you buy or lease a commercial real estate property? Here are some of the reasons why either one could be a good idea for you.

You Gain Equity In The Building

When you buy a commercial real estate property, you will gain equity in the property over time. As you pay down your mortgage you will own more of the building. It's possible, once you pay down enough of the mortgage, to use that equity in other ways, such as investing back into the business and using the property as collateral should you need any financing or loans.

The Building Will Be Worth More In Time

Over time, most real estate properties appreciate in value. This means it will be worth more over time. If you ever decide to sell the property, you will receive more in funds than you initially paid for it. This could help you buy a larger building for your growing business or use the funds for other ventures.

Turn It Into A Rental Property

If you want to, you could turn the property into a rental. If the building is large enough, you could rent part of it to another business while you use the other part of the building. Or, you could rent the entire building to another business and be a landlord. As long as you keep up the maintenance or have it written into the lease agreement that the company renting the building does their own upkeep, you could potentially make good money off of the rental.

Renting Gives You More Freedom

On the other hand, if you wish to lease a commercial real estate building, it will give you more freedom and flexibility as to where to keep the business. If you sign a lease, you and the building owner can choose how long it will run. This gives you flexibility in either resigning there for another few years or moving on to a larger building or even city.

Lower Up-Front Cost

When you lease a commercial real estate property, you have a lower up-front cost on the building. You don't have to worry about the mortgage or down payment. This gives you more financial freedom to invest in your business as a whole and not just the building itself. This can give you more freedom to grow your actual business.