At some point, most companies must decide whether it would be better to rent or purchase their commercial space. There is no universal answer to this question; rather, the answer is contingent on the characteristics of each company. Continue reading to get an idea of which option would work best for your company.
Pros of Leasing
Leasing has several particular advantages for new businesses. For starters, the process of leasing a space is faster than the process of purchasing one. There is usually more property available for rent than for purchase, and you do not have to wait for credit approval before you can move in. When you lease a commercial space, you may have to pay a deposit, but you will not have to make a down payment. A down payment is usually a larger fee, so you can save money and not be locked into a long-term commitment.
There are additional benefits to leasing that any company will enjoy. You can record your lease payments as business expenses and receive tax deductions. When you lease, you are usually are responsible for maintenance or repairs of the property. Having a landlord as the designated caretaker of your property can save you a significant amount of time and money.
Cons of Leasing
There are some downsides to renting commercial space as well, many of which stem from the lack of control that a renter has over the property. A space that is reasonably priced when you move in to it may be subject to yearly increases in rent price, which could eventually drive you out of the space if you are unable to keep up with costs. If the owner of the property does not allow you to renew your lease, then you will have to relocate, which could damage your client base and other aspects of your business.
Some of the pros of leasing have negative flip sides. For example, not being responsible for maintenance could be an asset if you have a responsive landlord, but a landlord who does not maintain the space could be detrimental to your business operations. While it is true that you are not locked into a long-term commitment with a lease, it is also true that your payments are not an investment in eventual ownership of the property, so from some perspectives you may be ultimately losing money.
Contemplate Your Future
When you are making the decision about whether you should rent or lease your commercial space, you should consider both your company’s current status and your plans for its future. The way you want it to grow will influence the way you want to apply your money. By considering all of your options, you can make the best decisions for your company’s future.