The Pros And Cons Of Buying Commercial Premises For Your Business
Company owners have two main options for choosing where to base their business. They can either buy or rent premises. Both have pros and cons, but which is best for their venture?
The benefits of buying
Buying real estate represents an investment, and in many cases, business owners who purchase property can make money in the long run. When you buy, you’re putting money into an asset, which may appreciate with time, rather than paying rent to another owner. Another key benefit of buying is accessing lower fees. The initial outlay will be much greater when buying rather than renting, but you may find that your mortgage repayments are far lower than a monthly rental charge. You can speak to a high net worth mortgage broker, since commercial property is usually much more expensive than residential. They can help assess your needs and affordability, ensuring you get the best price and don't miss your payments.
In addition to making financial sense for some company owners, buying offers flexibility. If you own the premises, you have free rein to change the decor or the layout, for example. If you rent, you may be limited in terms of how you can renovate or customize the space to suit your requirements and create a store or office design relevant to your brand.
If you own your business base, you could also consider renting all or part of the space out if you don’t need the entire space or your plans change. This means that you could earn an income to reduce your overheads. Using leasing software to conduct tenant checks and find suitable tenants is an excellent idea if you lease office space or retail premises. You may also need to check the terms of your mortgage and ensure that you comply with regulations for landlords and ladies.
The downsides
The most apparent drawback of buying is laying out a lot of money at the outset. Many business owners can’t afford to buy because they don’t have sufficient funds for a down payment or the means to take on a mortgage. Buying is inaccessible to many. In addition, some entrepreneurs may not want to tie themselves to specific premises for long. Renting allows you to move or grow with short and long-term contracts available.
For many businesses, renting also provides an opportunity to access prime locations, which wouldn’t be affordable to buy. If you run a clothing store or a cafe, for example, and you want to be at the heart of the action, you may find that you can afford to rent in a much better location.
Leasing premises can also benefit small businesses and startups with limited budgets, as you don’t have to worry about maintenance and repair costs. If you own commercial premises and the heating system breaks, for example, you will be liable for the price of repairs or replacements.
Whether you own an established business or you’re just starting out with ambitious plans to reach the top, it’s wise to explore the pros and cons of buying and renting commercial premises. Weigh up the options and consider which path suits you best.