It's a big decision: whether to buy or lease a business property. Purchasing a property can save you money in the long run, but leasing can give you important financial and logistic flexibility.
Remember that no two businesses are alike. To properly weight the pros and cons in your individual circumstances, consider:
How much cash you will need to make the purchase. To determine this, you will need to do a cash flow analysis, including:
- Financing terms and closing costs
- Your income tax rate
- Costs associated with ownership but not with leasing
- The period of time you expect to use the property
- The value of the property now and post-use
Remember, first-year cash flow projections aren't a good indicator of whether you should buy or lease. It's important to consider if a lease will provide you with the following:
- The ability to stay in the location as long as you want
- Freedom to make needed changes to the property
- Tax savings
On the other hand, do you want to be a property owner at this time? Ask yourself these questions:
- Do you want to be responsible for maintenance?
- How long do you intend to stay at this location?
- Will you need the cash to grow your business in other ways?
- Will your credit rating support a mortgage?
Location is always an important consideration, including:
- Are the property values in the neighborhood on the rise or on the decline?
If you are interested in a property where the owner would consider selling or renting, you'll need to weigh these considerations. Knowing the answers will also benefit you if you are choosing between two different properties, where one is a rental and the other is for sale.
Need more help finding and deciding about a business property? Call DRK at 614-540-2404 for assistance from a full-service commercial realtor in Columbus, Ohio.