When deciding to acquire commercial property for your business, one of the first decisions to be made is whether to buy or lease. There are pros and cons of both, but it is important to weigh them all and decide what will ultimately be the most beneficial for your business. How does a business owner navigate purchasing vs leasing commercial property?
Two very common situations where a purchasing vs leasing decision comes into play is: 1) if the business needs new or additional space or 2) if the business has the opportunity to buy the space where they are currently in a leasing situation.
When making this kind of decision it is important to do a market analysis. This is ultimately deciding whether or not the property will be a good investment. If it is predicted that the rental rates are expected to increase, thus driving up the property values, then it may be worth your while to purchase a property. In the same vein, it is also important to look into the inventory in your desired location. Commercial properties in prime locations can be hard to find, so be mindful not to sacrifice a good location, just because you are intent on purchasing a property.
A second item, financial analysis is also equally important. This is not only calculating which option will result in the lowest net cost. There are many other factors at play. What make the most financial sense for your business? If you are a new business and cash-flow is a major concern, it may not be possible to invest a large amount of money up front to purchase a property. However, if you are an established business with established credit and can carry the burden of a mortgage, perhaps it is in your best interest to purchase a property that can create positive cash-flow by renting out space to other tenants.
Let our amazing team at Menlo Group Commercial Real Estate assist you in making this decision for your business by contacting us here.