Should I Rent or Buy a New Commercial Property?

Have you finally found the perfect commercial property after weeks of searching but are unsure about whether you should buy it or lease it? You’re not alone. Surveys have shown that in 2020, 36 percent of investors regarded the industrial property sector as the most appealing investment purchase in the Americas.
Understanding the difference between renting or purchasing a commercial building is crucial for deciding between the two options. Here are the benefits of renting and buying a commercial property.

Pros of Purchasing

Building Equity

Buying a commercial property will help you build equity over time. How will this help your business? For one thing, an ownership stake in the property can allow you to use this equity as collateral when you expand your business. You can even use equity to fund your retirement, helping you secure your future in an otherwise uncertain phase of life.

Steady Costs

Don’t you wish your monthly payments stay fixed when you need to take out a fixed loan? Purchasing a commercial estate can help you do that! They won’t raise your monthly expense amid the loan period, so your costs will remain stable.

Tax Deductible

Purchasing a commercial building can help you deduct payments on your taxes. These savings can also assist you in compensating for the costs of property ownership. But you can’t deduct the monthly mortgage payment when you’re purchasing a property.

Rental Ability

If your property is large enough, and you’re successful in finding tenants to occupy this space, rental income can pave the way for a substantial revenue stream.

Pros of Leasing

No Down Payment

Purchasing a property will require you to put a large down payment that could range anywhere from 10 to 30 percent. But if you choose to lease a commercial property, you’ll only have to pay a deposit fee that’s usually equal to one month’s rent. So, leasing can help you utilize your remaining available cash for expansion or working capital.

Landlord’s Responsibility for Maintenance

Your landlord will take care of most repairs and maintenance on a gross or modified gross lease. Besides keeping the space clean, the landlord must ensure that the building is in good shape. Just make sure you know the specifications of your lease in and out.

Affordability

With rental payments, you can lease in a higher-end area with less money than buying in the same place. Leasing allows you to engage in competitive commercial real estate markets.

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