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Home Real Estate

Should I buy or lease property? Why cash isn’t always key

by admin
January 15, 2021
in Real Estate
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Should I buy or lease property? Why cash isn't always key
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Once a business owner knows the facility and location requirements for their business, it’s time for another crucial decision regarding what business property they should purchase and is it better to buy or rent the property? Factors such as business growth, income and legal requirements play a crucial role when making this decision.

If you consider the economics of leasing vs buying a property, the outright amount of cash needed to acquire property is less when leasing a property compared to purchasing one. However, if you purchase a property, you will end up paying less in the long term than you will have to pay if you lease the facility instead. Also, if you do purchase the property, you reap the benefits of any increase in the value of your property,  

There are many factors that every business owner needs to consider when deciding whether to buy or rent a business facility. To make it easier to understand, we have broken down some of the major factors you need to consider when thinking about buying or leasing a property.

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If you are confused about whether to buy a property for your business or not, here are some factors you should consider before making your decision.

Control of the Property

If you intend to renovate any aspect of your property, then purchasing should be your preferred choice. You won’t have to get permission from a landlord, and you won’t be paying for someone else’s renovations. Basically, there won’t be anyone watching over your shoulder, and you can decide freely what you would like to do with the property.

Long-term Costs

Purchasing a property is always cheaper than leasing in the long term. If you are leasing long-term, then the rent that you pay will eventually end up becoming a similar amount to what you would have needed to purchase a property. Also, if location is a prime factor to the success of the business, then your rent may keep continue increasing, and you might need to move your business location in a few years.

Increasing Land Value

We all know that the price of land is increasing day by day throughout many prominent CBD locations. If you find an area where you think the value of land will increase, it is always better to buy the property and enjoy the benefits of land value increasing.

Cash Flow

If you don’t want to make a massive investment all at once or if your business is relatively new, you will definitely want to keep your expenses low. Purchasing a property requires a considerable amount of cash which might not be feasible for all businesses.

Property Maintenance

One of the significant advantages of leasing a property is you don’t have to bear all the headaches of maintaining the property. Regular maintenance, heating and cooling maintenance, electric, plumbing are what you have to worry about when purchasing. But by leasing you can save all these maintenance costs as most leased properties are maintained by the landlords.

Flexibility

Leasing a property gives you the flexibility to change your business location as needed; you are not tied up in the same location. If a location has failed to serve the needs of the business, or you want to expand your business size, you will always have that freedom to move to another place.

When deciding if you want to purchase or lease a property for your business, it is a big decision. So, always make sure you are getting the right advice from the professionals, before making your choice.

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