Opening a small business in Los Angeles can be a daunting task, but one of the biggest decisions one must make is whether to buy or lease business property. One of the main benefits of leasing versus buying is that the initial capital required to lease is less than that required to buy. However, several issues are important to consider when exploring commercial leases.
One reason to consider leasing, besides the fact that it can help a business person to conserve his or her cash flow, is if a business does not have enough of an established credit rating to attain a mortgage. In addition, no maintenance is required when leasing. The landlord is ultimately responsible for the property.
It can also be beneficial for a person to lease if he or she cannot find a property for sale that is suitable for the business’s needs. Choosing a commercial lease is additionally wise if a business owner has found a suitable facility but it is located in an area with declining property values. Finally, if a person is not certain that a facility will meet his or her long-term needs, leasing is wiser than buying. Furthermore, rent can be deducted as an expense of doing business.
Once a businessperson in Los Angeles has decided to lease instead of buy, the main challenge is figuring out how to negotiate or draft a lease. One mistake in either of these processes can be financially costly or lead to preventable stress down the road. Legal guidance may help entrepreneurs to negotiate, draft and review commercial leases to ensure that their best interests are upheld.
Source: findlaw.com, “Factors to Consider: Lease or Purchase of a Facility“, Accessed on Dec. 29, 2016