Leasing a commercial property won’t always make financial sense for a business, nor will buying. Multiple factors can determine which option is suitable for your unique business model. However, when you find yourself in this situation, wondering whether you should buy or lease, consider the information below. Leasing a commercial space can often be a wise decision for these reasons:
More Flexibility
Even with the most detailed business plan, you won’t always know what the future holds for your business. Expansion might be on the cards, or you might see your business reducing in size. You can enjoy more flexibility by exploring a commercial property for lease.
Rather than buying a property that sees you tied to one building, you can lease a space with a fixed contract in place. If your needs should change in the future, you have the freedom and flexibility to move without worrying about selling a building.
Fewer Maintenance and Repairs Requirements
Owning your own commercial property means you are solely responsible for its upkeep. If something major goes wrong, like a roof leak or plumbing problem, you have to take care of it yourself. These issues can be expensive.
You generally have fewer maintenance and repair requirements as a tenant. However, reviewing your commercial lease to determine your obligations is important. Sometimes, landlords negotiate that you handle minor maintenance and repairs in exchange for a lower lease agreement.
It’s vital to ensure you’re not responsible for anything relating to law compliance and building codes. It’s often easier to negotiate a hands-off approach to maintenance, even if it means your lease payments are higher.
Excellent Tax Benefits
While landlords can enjoy a few tax benefits of building ownership, there can be a lucrative one for tenants. Lease payments are tax-deductible as a business expense. Anything used for business within that space is also tax-deductible, such as machinery and technical equipment. If you were to buy a building, there could be a number of tax burdens, like property taxes, federal income taxes, state income taxes, and local taxes.
More Time to Spare
If you’re already a homeowner, you’ll know how time-consuming it can be. You can spend a great deal of your free time mowing lawns, making repairs, and performing general upkeep tasks. The same goes for people who own commercial buildings. Even if you’re already busy with everyday business operations, you have to set time aside for building maintenance. As long as you have a maintenance-free contract in place with your landlord, this is something you don’t have to worry about. As a result, you can free up your time to focus on your business.
Easy to Exit
The sad reality is that not all businesses succeed. Even if you successfully bought your own commercial building, employed staff, and enjoyed healthy sales, unsteady economic conditions can change your financial situation. Suddenly, you’re considering closing your business or, at a minimum, downsizing it.
That can be much harder to do if you own your building. You must organize the building’s sale and find one to buy or lease that’s more fitting for your financial needs. If you’re closing your business altogether, you have to list your building for sale and hope it sells quickly to recoup your losses.
You don’t typically have to worry about that if you’re leasing a building. There might be penalties for ending a lease early, but a commercial property is usually easy enough to exit if your situation calls for it.
Commercial building leases won’t suit all businesses but undoubtedly suit many. Consider these facts above if you’re considering relocating your business or opening a new one. They might help you choose the best option for your needs.