Why do people opt to lease a commercial space?

On Behalf of | Jan 10, 2020 | Commercial Real Estate Leases |

You’re thinking about starting your own business, and you naturally assumed that meant buying the physical property for the company. You figured it was the first step to take. However, in talking to others about your plans, they suggested renting.

You worry that renting just gives you yet another way to spend the company’s money, which you’ll never see again. If you buy, at least you own the property itself, and you can theoretically sell it to recoup what you invested.

That’s true, but don’t assume that there are no benefits to renting. There are many, and here are some of the main reasons people choose to rent:

  • They do not need to invest as much up front. The company isn’t making money yet. They can always buy after it is.
  • They take on less risk. If the company fails, they are not stuck with a long-term mortgage or a building they can’t afford.
  • They don’t have to worry about upkeep. The landlord is likely responsible for repairs and other projects.
  • They can write off a lot of the costs, from the utilities to the rent itself. These tax breaks can help a young company with little initial income.
  • They may want to move. Since the company is new, they don’t know for sure if this is the right location. They may learn a lot in the next few years and decide to relocate. They can always buy at that point.

Renting and buying both have their pros and cons. Whichever one you choose, just be sure you fully understand the legal process and your rights.