There isn’t just one way to run a business, but no matter which method you choose to operate, all business owners have to consider their bottom line. That said, what works for one company might not be in the best interest of another in the long run. The same goes when deciding between buying vs leasing real estate for your company.
While in some instances, the assumption of opting to lease as a start-up and buy as an investor is optimal, there are other nuances to consider when deciding between buying vs leasing real estate. There are pros and cons to either approach, each suited to certain situations. Here are some of the different factors to consider before taking the next step in growing your business:
Before making a serious investment, it’s crucial to first consider the current available funds a company has access to. A mom-and-pop business can’t financially operate in the same way as a multinational without hurting their business. In terms of buying vs leasing real estate, some companies will benefit from the smaller overhead cost of leasing a property, while others will be able to accommodate the investment for future returns.
Instead of making a large initial investment, a small to medium enterprise can benefit from leasing prime commercial properties in business districts without burdening their overhead. Leasing property in curated communities can allow businesses to flourish around their ideal market – and being within arm’s reach of residential neighborhoods helps them become go-to establishments for those who live nearby.
Alternatively, even a startup with access to more financial resources can consider buying vs leasing real estate, seamlessly creating additional sources of income for their business. This kind of venture can generate additional profit by leasing out portions of their property and offering services to tenants, while simultaneously building equity over time. Once they outgrow their space, they can either take over the whole property or relocate while generating income from the property they own.
Duration of Use
While the thought of owning commercial real estate is enticing, determining the stage your business is in can define the difference between buying vs leasing real estate. Most companies eventually outgrow their initial workspaces, so leasing commercial property might benefit business owners in the early stages of their development.
On the other hand, some companies are primed and well-suited to take root and establish their own permanent base of operations. If a company is looking to buy commercial real estate, it’s crucial to deal with reputable developers knowledgeable about the history and trends of a property’s location. This will allow the business to maximize the future returns of owning commercial real estate.
Control of property
While there may be a lower overhead cost when leasing property, grand innovations are subject to the approval and terms of your landlord. The level of dynamism your business operations require can help you decide between buying vs leasing real estate. Moreover, if your company operations necessitate periodic upgrades or renovations outside of your lease agreement, any permissible changes you make to increase the property’s value will ultimately benefit the landlord in the long run.
One privilege of leasing real estate is the ability to move into a ready space and delegate the responsibility of handling property repairs. For newer companies that prefer to focus on their core operations, this is well worth the low overhead.
Securing permits and licenses, and shouldering the property’s maintenance and upgrades are all duties that fall on a property owner. While there are substantial responsibilities to managing real estate, landlords are also the ones poised to reap substantial gains.
Meanwhile, buying a property presents prime long-term opportunities for businesses that plan ahead. For enterprises that are looking to expand and establish permanence in a particular district with a steady market from nearby residential neighborhoods, buying their own real estate offers them flexibility in their business plans, allowing them to position themselves favorably in the long run.
As with any business strategy there are pros and cons to opting for either buying or leasing real estate. Considering these broad factors serves as a good initial baseline when determining what strategy works best for your situation. Whether you’re evaluating your options as a start-up or as an established company, a proper assessment of your situation can be advantageous for your company’s bottom line.
Make The Smart Choice
If you’re considering expanding your business in the fast-developing City of Smiles, Rockwell Center Bacolod, with its signature sophistication at the heart of the business district, offers a unique opportunity. It presents a streamlined combination of residential and commercial real estate, providing multiple avenues for businesses to grow or expand, whether they decide to buy or lease real estate properties. Additionally, Rockwell Center Bacolod provides a range of commercial lots with varying sizes, ensuring that you have diverse options tailored to your specific needs and preferences.
Make the right choice for the future of your business and contact us here for more information.