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Xero – Gold Partner

Buying vs Leasing Commercial Property

By | April 12, 2016

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The decision whether to purchase or lease a commercial property is usually more complex than buying a house. Not sure which is the better option? Here are some pros and cons of each.

BUYING

PROS

CONTROL: It’s yours and you can do with it what you wish. Sell when you like, renovate, it’s your decision.

VALUE: It’s likely that the value of the property will increase over time. If there is a sudden turn of events, you can sell it for a profit.

PLANNING ABILITIES: Knowing what your repayments, overheads,  property maintenance costs are can help with future planning and growth.

CONS

PRICE: Commercial properties are not cheap. Along with a high purchase price, deposits can range between 25% – 50% depending on how much money you have behind you.

OUTGOING COSTS: Need to change the layout, have the security upgraded or need maintenance done? It will be at your cost.

LEASING

PROS

FLEXIBILITY: You’re not tied to a property if you grow. You can simply move out and move onwards without having to go through the sale  process.

CHOICE: Leasing means you can react faster to changes within the business. It does not tie up money as it would if you owned the property and allows you to open stores or offices in several locations.

CONS

RENT: Leasing almost guarantees that your rent will increase over time.

LACK OF CONTROL: If the owner decides to sell the property, you may be forced to move out. This may not come at a good time and can be detrimental to your business.

YOUR NOT BENEFITTING: The same rule applies to houses as it does commercial properties—you’re paying someone else’s mortgage.

It’s a common topic which is raised by our clients. Many businesses are at the cross roads of this decision. If you would like to see us about your business direction and objectives for the future, please contact us today.

 

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Rodney Quinn, Quinn Transport

Sue & Steve Trezise, Steve Trezise Electrical