Should You Buy or Rent Your Next Commercial Property

Are you planning to invest in commercial real estate? You have plenty of options. 

However, perhaps the most significant dilemma is deciding whether to buy or lease a commercial property. 

The answer is especially tricky when you are making such a transaction for the first time. The wrong option can derail your savings and growth. Thus, making a choice that will yield long-term benefits is critical. 

But, let us help you and support you through the process. Click here how to decide between buying and leasing your next commercial property. 

How Long Do You Want to Retain Control of the Property?

One thing to consider in your real estate decision is the length of ownership acquisition for your property. You can say this drives your investment. Therefore, you must decide before you go for the listings. 

Buying a commercial property provides you with permanent rights over the land and related structures. However, once you enter the CRE lease, your rights are limited for the lease period. This typically ranges from 3-10 years.  

However, I believe buying a CRE can be a better option. This way, you can plan to stay on the same property permanently. You can even retain your complete ownership right, such as subleasing.  

Now, maybe you are looking for more flexibility in moving out after a few years. Then renting your property is a more suitable option. You may click here to learn more about these options and their overall compatibility with your operations. 

What’s Available in the Size You Need?

There is another thing you must consider while making decisions for commercial real estate. You might have a size of property in your mind already. But you have to look for the property type as well. 

This is because CRE can often run on limited inventory in any given region. You may have plenty of listings open in an area. However, most of them may refer to properties that are available for lease instead of sale. 

Curiously enough, this might go the opposite way in some scenarios. You may see that there are specific sizes of properties available mostly for sale rather than lease. 

Then, you might have to change your priorities on selected properties. 

In such situations, you can look for properties of different sizes and specifications instead of your original requirement. Otherwise, you can rework your initial plans and finances to fit the CRE availability of sale or lease. 

Do You Expect Your Size Needs to Grow?

The possibility of growing your budding startup is always in the cards. However, this does not always translate into tangible plans for every organization. 

You need to be pragmatic about these future opportunities while hunting for commercial properties. 

For instance, you have just started your business or have plans to shift it to a fast-growth mode. In such cases, it is more than likely that your property size requirements will grow over time. 

Or suppose you have an established business that has not experienced rapid growth. Therefore, your square footage requirements may stay in place for the foreseeable future. 

You might want to purchase a commercial property to grow your business. In that case, you must keep your desired size requirements in mind. 

If you are planning a massive expansion for your business, that’s a different scenario. You can buy a long-term contract based on your current size needs.  

However, when you lease a property, you can start with your current size requirements as a budding or established business. 

You can then upgrade to other options according to your lease agreement if and when you are about to execute your growth plans. 

How Much Can You Afford to Buy vs. Lease?

When choosing between buying and leasing, budget acts as a decision-making factor.  

Whenever you purchase commercial real estate, you need massive capital at hand. You also need to cover maintenance and other related expenses for as long as you own the asset to foot the costs. 

However, when you are leasing CRE, the funding requirements are dialed down significantly. You can essentially obtain your commercial space for a fraction of its original cost, with the condition of vacating it according to your lease agreement. 

With that, purchasing your own commercial real estate property adds to your assets. It also allows you to grow your investment over time. Paying for a lease does not contribute anything tangible other than commercial space to your operations. 

It may also increase your overhead expenses with rent increments. You may click here to learn more about these options and their overall compatibility with your operations. 

Consider your company’s overall funding and future expenses to determine which of these options better suits your needs. 

Keeping these factors in mind can help you make an informed decision while moving forward with your CRE plans.

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