Is it better to buy or rent commercial property?

On Behalf of | Dec 12, 2023 | Real Estate Law |

If you are interested in commercial property, you may consider whether renting or buying it is a better option. There are benefits and disadvantages to both.

Renting vs. Buying

The decision whether to rent or buy a commercial property can be based on financial considerations, the market in your area and other goals.

If you purchase a commercial property, you have the benefit of building equity in the property. This means that when you go to sell it you can make a profit which can be reinvested in your business, if you choose. It can also offer you more control over customizing the building to your needs and prevent rent increases or having to move.

One of the disadvantages is that you must pay all upfront costs, fees and the down payment on the property. It could also take time to sell the property, depending on the market.

If you rent a commercial property, it often requires less money up front which can help maintain cash flow. This can be especially helpful if your business is newer. It is also beneficial to know exactly how much your rent payments will be each month and you have less responsibility for maintenance and repairs. A lease can offer more flexibility if you need to relocate.

The disadvantages include less control over the property and requires permission from the landlord to make changes. You also will not gain equity in the property.

Researching the market

Before you decide whether renting or buying is the right decision, you may want to complete in-depth research of the market and consider how long you plan to have the business.