Buying vs Leasing Commercial Real Estate: Pros and Cons of Each
Commercial real estate in Oklahoma has pros and cons whether you choose to lease or purchase your property. If you want to know which route to take, consider what comes with each.
Buying vs. Leasing Commercial Property
If you need a commercial building, you run into the question of lease vs. purchase for business.
So let’s take a look at what comes along with both.
Leasing Commercial Property
Many businesses begin by leasing commercial property because it requires less money upfront, so here are some of the pros and cons of going this route.
No down payment: Leasing commercial property does not require the typical 10 to 40 percent down you need to purchase. This increases liquidity for the business.
Fixed costs: Your monthly rent will not change as long as the lease is in effect. The fixed cost helps you plan.
Less responsibility: Your landlord is responsible for much of the repair and maintenance, taking some of the burdens off you.
Taxes: Your lease payment is deductible.
Options: You can always move after your lease is up if you do not like the space.
No Available Equity: You do not have the equity that comes with owning a property when you lease.
Rent: The rent of a space is often more than a mortgage payment.
Little Choice: Your landlord will put restrictions in the lease. You have little say in any choices that are not explicitly yours to make. For example, you may have to use maintenance chosen by the landlord.
No Value: Any investments you make benefit the landlord, not you.
Buying Commercial Property
Equity: You will build equity when you purchase your property.
Income: When you consider lease vs. purchase for business, remember that you have the ability to rent any space you are not using.
Add Value – Any improvements to your property add value for you.
Taxes: You can deduct for depreciation on the property.
Control: You have control over how you manage your property.
Upfront Cost: You need a significant budget to move forward with the purchase of commercial real estate in Oklahoma.
Responsibilities: An owner is responsible and liable for any issues with the property. Whether maintenance, injury, repairs, or taxes, the owner is ultimately responsible.
Loss of capital: If your property value declines, you will lose money, which is problematic if you decide to sell your building at the wrong time.
Now that you are familiar with some buying vs. leasing commercial property guidelines, consider what is best for your situation. If you would like to purchase in the future, you might find some lease to buy commercial properties. Should you want any support in your search, please contact us.