You need a space to run and manage your business. While you might have options, accessing and using the right space can be costly. Ensure you choose the right commercial space for your business to thrive. Leasing or buying commercial spaces are the options you have. But which one is the best? Check the pros and cons of each.
Leasing Commercial Spaces
Pros
Flexibility
Unlike buying a commercial space, leasing gives you more flexibility. The process of your business, to a larger extent, determines if you will stay or move to another location. You also choose the commercial spaces according to your financial plan. It is easier to choose and settle for a prime through leasing.
Fixed Monthly Cost
Unlike owning the space, you avoid the related maintenance, repair, and upkeep needed when you lease. This makes it possible to easily create fixed monthly costs and manage your finances.
More Liquidity
Besides the upfront fees, leasing helps you tie up less of your cash. You avoid the down payments and other financial obligations that come with buying commercial spaces.
Cons
No Control
Several restrictions might affect your business operations with leasing. You operate within a structure and have no control over the rental space.
No Equity or Appreciation
Unlike owning the space, leasing doesn’t allow you to accumulate any equity. You don’t benefit from the property’s capital appreciation when you lease.
Buying Commercial Space
Pros
Building Equity
Unlike leasing, buying a commercial space is an avenue to build equity. By owning the space, building the business’s overall value and making it profitable is easy.
Control
You have control over the property you own. Unlike in leasing, you don’t have to negotiate or abide by the rules set during business operations.
Tax Breaks
The option of deducting interest and depreciation on your property makes owning the space a good decision.
Appreciating Asset
You benefit from capital appreciation as the property’s value increases over time when you own the space.
Cons
Prepayment Penalties
After taking a commercial real estate loan to buy a space for your business, you should expect hefty prepayment penalties when you fail to meet the borrowing agreement.
Liabilities
Owning a commercial space makes you responsible for every liability in it. Besides the repair, maintenance, and upkeep needs, your responsibility is to handle any accidents or injuries sustained on your property.
Deciding to lease or buy a commercial space for your business can be hard. You need guidance. Reach out to Capital Finance Partners today to meet your expectations.
