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Which is better—buying or leasing a commercial property?

On Behalf of | Feb 4, 2023 | Commercial Leases

Operating a successful business requires sound decision-making, especially as the company grows. For example, if you must relocate due to growth, you’ll need to decide between leasing or buying your next commercial space.

Unfortunately, there is no easy answer to whether it’s better to buy or lease commercial real estate as it depends on factors unique to your company. However, knowing some general advantages and drawbacks of both options can make your decision easier.

Pros and cons of buying

One benefit of purchasing is that the property appreciates over time, meaning it will increase in value. On the other hand, a significant downside of buying is that it requires a large down payment.

Other possible pros and cons are:

  • Pro: Rental income potential
  • Con: Financing difficulties
  • Pro: Potential tax benefits
  • Con: Increased liabilities (premises injuries, etc.)

When considering the pros and cons of buying a particular property, ensure you account for issues relevant to your business (location, access, etc.).

Pros and cons of leasing

Many business owners like the flexibility that comes with leasing a commercial space. If the property fails to meet their needs, they can relocate when the current lease ends. Other advantages and a few downsides of leasing include:

  • Con: No potential for rental income
  • Pro: Fixed (and dependable) monthly expenses
  • Con: Lack of control over the space
  • Pro: Fewer upfront costs

Weigh these pros and cons carefully to ensure your commercial real estate decisions do not pose hardships for your business operations.

Guidance can bring clarity

You want to make sound choices in all areas of your company’s operations. An analysis from someone knowledgeable about California commercial real estate can help you find the clarity to make well-informed business property decisions.