It is the age-old question: Should you Buy or continue leasing? In a perfect world, it would be nice to have a simple answer for your question. In reality, weighing the advantages and disadvantages of each in the light of your current situation is the best way to determine the best course of action for your business.
Factors to Consider When Making the Lease or Buy Decision
Arguments in favor of leasing:
- Initially it is cheaper to lease property with the down payment and closing costs for buying. For cash strapped business, this allows you to keep limited working capital in the business while continuing to grow.
- Increased flexibility. If your business needs (staffing, size, space, etc.) are always in flux, purchasing a property may decrease your ability to easily change locations to fit your needs.
- Upkeep and Maintenance are not your responsibility. Most leases require the landlord to pay for any maintenance issues that the building has.
Arguments in favor of buying:
- Monthly payments Build Equity for you.
- When you no longer need the building to house your business it can continue to provide rental income and consistent cash flow.
- Appreciation in the value of your building will benefit you as opposed to a landlord.
- Annual Depreciation and Interest expense can lower your tax liability as a direct offset to income.
- The building is yours, so you can truly make the space work for you. If you need to make improvements to make your space more efficient and suited to your specific needs, do it. You in control of your building.
- Once financing is in place occupancy expense is much more fixed than simply relying on market rents to determine costs. Taking advantage of the current low rates can only further shield you from likely spikes in rental costs as the economy recovers.
How to know which course is best?
We believe that buying is not right for every business owner. There are those that have ever-changing needs, and do not know where their business will take them in the next several years. However, many businesses, such as law firms, medical practices, and various service related operations become a fixture in their community and for these owners buying a building can ensure they will remain cost competitive as their business matures.
For some the desire is there, but coming up with the down payment may be tough. NonBank Lender’s alternative lending loan programs offers small business owners a chance to purchase commercial real estate for as little as 10% down.
Deciding which category you fall into can seem like a huge task, but we can help. We can create a side-by-side cost analysis catered specifically to your situation. Don’t let indecision derail your dreams of ownership, our team is ready to help. Contact us today to learn how NonBank Lender can help you get approved for an SBA 504 loan to grow your business.
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