March 22, 2018

Breakdown of the Benefits of Leasing versus Buying Commercial Property

If you’re searching for commercial property that will perfectly suit the needs for your business, it’s important to start things off by narrowing down a very important aspect. Are you seeking commercial property for sale? Or perhaps commercial property for lease is the correct route to take? Leasing versus buying commercial property each require entirely different approaches. A lease can provide more flexibility and the opportunity to leave after the duration of the contract. For some business owners, this option is priceless. On the other hand, purchasing commercial real estate can be an investment in the future that can provide fantastic returns on your initial investment if the property value increases over time. Alternatively, things can go south quickly if the value of the property diminishes and you are stuck paying off the building.

Rakow Group can provide assistance and guidance for either option you decide to choose. We’ve prepared a brief synopsis below detailing why leasing or buying commercial property might be the right decision for you.

Benefits of Leasing Commercial Property

Signing a lease on commercial property or an office space real estate for your business might be a decision that takes your company to the next level. There are quite a few benefits to be had from leasing. One huge benefit is the fact that you will be able to spend more money on your business rather than on the property housing your business. Leasing requires less capital than buying. With more working capital freed up from foregoing a property purchase, you can use those dollars to grow and reinvest. Additionally, leasing can provide the opportunity to set your business up in a great location for a fraction of the cost that purchasing would in that same area. Lastly, you won’t have to deal with the trials and tribulations that owning a property requires. Your landlord or leasing company will have to handle that, which means more time for you to focus on your business.

Benefits of Purchasing Commercial Property

Buying commercial property for sale can require a lot of capital and due diligence. It’s an option that can be extremely rewarding as well. One huge benefit is the tax deductions you can claim after the purchase is complete. Paying less taxes allows you to use that money for other business-related activities, which might make sense for your business. Additionally, after you have your mortgage rate set for a long-term period, you have a clear picture of what your costs will be in the future and can budget accordingly. No need to worry about rent increases. If you purchase a large office space real estate property, you can make some additional income by leasing out spaces in the building to other companies in need of space.

Perhaps the most compelling benefit of purchasing commercial property is the opportunity it provides for you to build equity. Instead of paying monthly rent that is a sunk cost, each month you are actively decreasing the amount of debt you owe on the property and getting closer to owning it outright. You can also be building equity if the value of the property you purchased increases. Building equity provides you with the opportunity to sell, use the equity to finance other property purchases or take out a loan for your business if necessary.

As you can see, there are a variety of benefits for both leasing or purchasing commercial real estate. Determining the right choice for your business depends on your current situation and future goals. Remember, Rakow Group is always ready to help you make the best decision for your business.