Should you rent or buy the commercial property for your business?

| Dec 11, 2020 | Uncategorized

Some people can run their small businesses from home. If you provide a digital service or dropship items from an international supplier, you don’t need a physical location to do your job.

However, quite a few businesses need a storefront for manufacturing facilities in order to operate. If your business model requires a physical location, you will need to decide whether renting a space or buying it will work better for your business.

Commercial real estate transactions for purchase or lease are usually more complex than residential transactions, which leaves many people feeling overwhelmed. Thankfully, there are factors that can help guide your decision about whether to rent or buy.

Signs that renting will be the better solution for your business

Every company has its own unique needs and considerations, but there are some general circumstances that might make renting your commercial space a better option for your business right now. If your company is a startup, renting until you know how successful you are might be wise.

If your business has just had to restructure or downsize, renting until you find equilibrium could be a good solution. If you believe that significant growth will occur in the next 10 years, renting until you know how big you will get can ensure the property you purchase eventually meets your needs.

Renting is also smart for many retail operations, at least a first. Purchase prices for commercial properties in areas with heavy foot traffic can be prohibitively expensive for new businesses.

Signs that making a purchase might be a better option

Not all companies want to have a landlord overseeing their use of a space. Especially if your company needs highly customized facilities, purchasing and renovating a space might make more sense than investing in upgrades and changes for a space that you don’t own.

If you have already established your business and have either adequate financial capital or credit, investing in a commercial property not only keeps your costs slightly lower than renting but can also give you the added benefit of accrued equity over time.

Making decisions about whether to rent or buy and negotiating real estate contracts can be a challenging part of being a business owner, but with the right help, you can successfully navigate these difficult processes.