How to Choose Between Leasing or Buying a Commercial Space

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Whether your current lease is about to expire or you are looking for a spot to launch your business venture, choosing a location is a huge decision. As they say, location, location, location. If your customers reside in a particular area of town, it only makes sense to make sure you are operating close to that area. But how do you decide between leasing or buying a commercial space?

Buying

One of the advantages of owning your own space is knowing exactly what your future costs will be. Unlike lease costs which can fluctuate, mortgages have been declining for decades. Depending on your business type, ownership may also be beneficial. For example, if your business requires specialized equipment and machinery. You also have the advantage and option of bringing in additional revenue by utilizing any extra space on the location.

On the other hand, a downside to ownership is if your business is experiencing rapid growth or needs to downsize. It is also a good idea to set aside an annual maintenance budget to cover major and/or unexpected repairs (e.g. roof replacement). All expenses will be your responsibility.

Leasing

Renegotiating a lease can be a much simpler process than trying to buy a commercial space. In addition, property taxes, maintenance and repairs, insurance, parking and security are typically included in the lease agreement. A lease can also work in your favor during periods of slow demand. If you have a good relationship with your landlord, they might be willing to renegotiate more favorable lease terms (e.g. longer lease period or lower rate) during the slower period.

However, a major downside to leasing is that there is no guarantee that you will be able to renew your lease under similar terms. In addition, lease costs can be affected by various factors. For example, improvements to the building, demand, changing real estate values, etc.

Consider Long-Term Financial Goals

Trying to come up with enough capital to cover day-to-day expenses – like rent – can be hard, especially during slow months. If your business is trying to expand to make room for further growth, additional cash will also be necessary. If your business is struggling to find a cash solution, consider an alternative provider like First American Merchant. With FAM, your business not only has quick access to flexible funding and secure payment processing, it can also benefit from low cost countertop ATM machines and a support team with years of experience.

From choosing between leasing or buying to finding low cost equipment, the key is to research the costs and weigh the pros and cons of each option before making a decision. Always keep the long-term financial health of your business in mind.

Business Funding expert, Nathan Hale, founded First American Merchant with his eyes set on helping the backbone of our country, small business owners. His passions include writing/producing music, and travel. First American Merchant is America’s Best countertop ATM machines company, serving both traditional and high-risk Businesses.