Should You Lease Or Buy Commercial Property For Your Business?

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Should You Lease Or Buy Commercial Property For Your Business?

Commercial real estate is designed for business use. If you plan on running a business, you will need to buy or rent a commercial property. You have the choice between purchasing property or renting it, but you might wonder which is better. Both options are great choices, but there are differences you should understand before you choose one or the other. Here are several differences to compare that may help you make the right decision.

Upfront Costs

There is a difference in the upfront costs for these two options. When you lease a space, you may have to provide payment for the first month of rent and a security deposit. This amount is likely more affordable than the upfront costs when buying property. When you buy property, you might need a 20% down payment on the real estate. If the property costs $400,000, you may need $80,000 upfront. This amount is a lot more than you'd need to lease property.  

Expenses and Maintenance

The second difference is the costs for expenses and maintenance of the real estate you purchase. If you own property, you are 100% responsible for these costs. If you lease space, your landlord might cover some of the costs.  

Long-Term vs. Short-Term

Next, there is a difference with the time frame that you should think about and compare. If you own property, it is a long-term investment. If you ever want to move to a new location, you will have to sell it before you can move. If you do not want to invest in a long-term property, it is better to lease space. You can often lease space for only one year, so this is a short-term investment.

Expansion Abilities

The other factor to consider is the ability to expand. If your business is growing, the property might suit it well now. Will it suit your needs in a few years, though? If you own property, you could buy space that you could expand. If you lease property, you might be stuck with limited space. The only way to expand might be to move to a new location. This quality of a building is vital to consider as you make this decision.

These are four of many factors that you should compare as you decide whether to rent or buy commercial real estate. Talk to an agent who works with commercial properties to learn more about your options right now.

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About Me

Homes, Properties, Buildings & More: A Real Estate Blog When you think of real estate, what comes to mind? Most people initially think of homes, and indeed, private residences to comprise a pretty big portion of the real estate market. However, empty lots, office buildings, and commercial buildings are also considered real estate. When shopping for any type of land or property, you need to ensure the real estate agent you hire has expertise in the particular type of property you want to buy. For instance, you don't want to hire a commercial real estate agent to help you buy a home. Learn more about the intricacies of real estate on this blog.