Should you buy or lease a commercial property?

On Behalf of | Dec 20, 2023 | Commercial Real Estate Leases | 0 comments

The location of a business is crucial. But this is not the only decision you need to make regarding property. Should you lease or buy the commercial property you find? Which is the most suitable option?

Here are a few factors to help you decide:

How is your capital?

If your capital is tight, consider leasing a property to have funds for other expenses. But if you have enough funds for a down payment, you can buy a property if other elements prove buying is the better option.

Are you comfortable being a tenant?

If you don’t have an issue being a tenant, leasing can work for you. But if you want full control of the property and the ability to make renovations without breaching any contract, buying could be the better option.

Do you want to build equity? 

If your goal is to build equity – sell the property for more than you owe on the mortgage, then you should buy. With equity, you can get a loan in the future to purchase another property, expanding the business. 

Are the market conditions stable?

If the market conditions are unstable for your business, possibly your idea is new, you should lease while you weigh your options. Nonetheless, with enough capital, you can purchase a property despite the market conditions. If the business fails to grow as expected, you can lease the property to tenants.

Do you have enough time?

Buying a commercial property requires time. If you are short on time, perhaps you need to launch the business within a month and haven’t gotten an ideal property yet, you can lease in the meantime. But you should still be careful – you don’t want unfavorable leasing terms. 

There is no one answer to buying or leasing a commercial property. Regardless of your choice, seek legal help to avoid costly mistakes.