If you run a small business, you have two options: own or lease property. This is a question that a lot of commercial real estate brokers ask. But like many other things in business, the answer is that it depends on your situation. Here are some of the things you have to weigh before making a decision.
There are a few reasons why leasing commercial property makes more sense than buying. They include:
• Your business is in the growth stages, and you are unsure how fast you will outgrow a property.
• Capital is tight, and you do not have enough cash for a down payment.
• You are in a time crunch and need a building in the next month or two.
• Unstable market conditions, meaning it is less risky to commit to a lease than owning property.
• Your company is still young or in the building phase.
• You have just started operating in a new area or have a tight customer base
Reasons To Consider Owning A Property
That being said, there are times when owning property makes more sense than leasing. Here are some of the reasons.
• You get to have full control of the property without having to answer to a landlord
• Most small businesses can purchase a commercial property even with a 10% down payment using a Small Business Administration
• You are building equity plus a long-term wealth
• Even if the business goes under and you are forced to close or want to sell, you have a real estate venture to fall back on. You can lease to tenants.
• You might get some tax advantages (consult with an accountant first about this)
Deciding To Buy Or Rent
As you can tell, there is no direct answer to whether to buy or rent. However, before making such a huge decision, factor in your business’s goals, projected growth, and access to capital. If you are thinking of buying, think of how you would do in the event of a recession. It is important to think of scenarios like this.
Whichever option you decide on, you can rely on Means Commercial Capital for access to funding. We have partnered with many small businesses looking for funds and will be glad to have you on board as well.