When people are debating the topic of lease vs buy we usually assume they’re talking about residential properties. If you’re not convinced just take one look at Google search and it seems as though the only assets you can lease and buy are residential homes and cars. There is an overwhelming amount of information out there about those two subjects, but there seems to be an absence of material on the pros and cons of leasing or buying commercial real estate. To better resolve this incongruous situation we decided to put together a guide that should help you determine whether leasing or buying is best for your business.
Lease vs Buy - When Should You Buy Commercial Real Estate
Our first foray into the lease vs buy debate is going to cover all the pros and cons of buying commercial real estate. Let’s start with the good stuff. Owning a piece of commercial real estate can be a seriously beneficial asset for your business. They’re easy to finance and, with the right investments and improvements, you can get a significant return on your investment. That means when you’re ready to move onto your next office, you can use some of that re-sale money to cover the costs of your move.
Unfortunately, there are some downsides to buying commercial real estate and in those instances it may make more sense to lease your next office space. For example, if you don’t have the financial resources to make a sizable down-payment on a piece of commercial real estate (and you can’t afford all of the creative ways to finance said property). Before you decide to side with the lease side of the lease vs buy argument we encourage you to compare the rates. While it may initially be cheaper to lease, a long-term investment that leads to your owning the property may be a more fortuitous option.
To best compare whether or not you should buy a property or lease one is to create a lease vs buy model (just like the one you create for your other investments). At the end of the day, that’s what a piece of commercial real-estate is; an investment. So, before you buy be sure to compare rates, look at creative financing options and make a decision that is beneficial for you long term. If you have any questions about local commercial properties please feel free to give us a call at 516-248-6905. We look forward to hearing from you!