Legal Advice During Challenging Times

Your commercial headquarters: Should you buy or lease a space?

On Behalf of | Apr 26, 2024 | Real Estate Law |

Whether you’re expanding an existing business or starting your first, you face some big choices if you’re thinking about commercial growth. One of the most crucial decisions you may face – depending on your business model – involves whether to buy or lease a new commercial space.

The ideal option depends on your specific situation. However, understanding the general advantages and disadvantages of each can guide you in finding the wisest path for your company either way.

Should you buy a space?

One upside of ownership is clear: property values tend to rise over time, allowing you to build equity. However, the initial investment can be substantial, requiring a hefty down payment and other costs. Be sure you can afford the upfront costs. Other ownership considerations include:

  • Pros: Potential rental income, possible tax benefits
  • Cons: Financing challenges, liability for maintenance and repairs

Sometimes, a property’s value hinges on factors specific to your business, like location and access. Carefully evaluate these aspects before making a decision.

Should you lease property instead?

Leasing offers flexibility. If your business needs evolve, you can move on when the lease ends. Financial predictability is another perk: fixed monthly payments create a stable budget line item. Other considerations include:

  • Cons: No chance of rental income, limited control over modifications to the space
  • Pros: Less upfront cost, hands-off approach to property upkeep

Weigh these pros and cons thoroughly to ensure your real estate decisions foster, not hinder, your business growth.

Running a successful company requires smart choices, including ones concerning a commercial property selection. Once you find the ideal space, consider having someone review your purchase or lease agreement (before signing) to better ensure that it serves your best interests.