There are a number of factors that every business owner needs to consider when making a choice regarding buying a property or leasing it. The minute a business owner determines the vital needs of thebusiness facility and goes on a searching spree for the best deal, he is faced with the choice of either buying or leasing. Would buying or leasing property be an appropriate move for your business?
This is a common question among most business people who are expanding and planning to change business location. The answer to that question is usually hinged on a couple of contexts: buying property or leasing property. To arrive at a better conclusion and be able to make an effective choice, here are useful ideas that will enlighten you.
One of the major upsides of leasing property is the low cost of operation involved in the process. When you decide to lease a property, you are likely to spend less than you would if you had to buy the same property. In addition, use and access to the property is usually limited as per the agreement made between a business person and a leasing company – temporary use of the property. To lease a property, you need to familiarize yourself with the leasing terms before signing the contract. Once you settle for leasing, you will only be allowed access to the building for the stipulated period as per the lease.
Buying an industrial property also has its advantage. If you buy a property for long-term purposes, you will definitely spend less than you would have if you had leased it initially. The other benefit is value appreciation of the property, which depends largely on location. To buy a property, you will have to consider things such as financing and purchasing terms, tax implications, facility depreciation (its useful life), estimation of asset value (for future sales), business capital and other additional costs.
Most business men (especially the ones starting a new business) usually pay more attention to leasing as opposed to buying property. This is because of the tendency to focus on the short-term needs of the business. To some extent, it is understandable as most business men will rely on the first year cash flow projection to make critical choices. Things do not always work out as planned and taking precautions may be necessary. However, certain cases such as the possibility of the business staying in the same location for a long time may bring about second thoughts. In addition, necessity of building modification (to suit the business) and the landlord’s take on it can also influence your choice in purchasing.
As mentioned earlier, this is one of the factors that is limited by a lease. When you lease a property, there is a certain level of modification that you can be allowed to carry out while in the premise. In addition, there are stipulated hours for operating in the premise. The truth of the matter is that not many business men would be too comfortable looking over their shoulders when making a move. However, if you want full control over the premise without any restrictions whatsoever, buying is the only option that guarantees you freedom. You may only have to worry about the local authorities with matters such as zoning.
Long term costs
A foresight into the business cash flow is an essential element to consider before making the choice. This is because leases usually beat out property buying when it comes to cash flow. Leasing usually works bestduring the first several years of the business. Over the long haul, nonetheless, buying property is a much better option. This is because the landlord incurs costs for purchasing or putting up the building as well as maintenance. When you lease the property, he is likely to charge highly to build up profit. You can simply avoid spending too much money renting a property by simply buying it.
Location of property
There are locations that easily entice you to buy a property. For instance, places where the appreciation rate for property value is always on the rise is a quite an enticement. In this case, many business men would settle for the buying option. This is because despite enjoying long-term benefits of property ownership, they can sell the property in future and gain more.
All in all, you need to make the final decision based on the information you acquire after carrying out a little research on the advantages of leasing or buying property. Working with agents specializing in industrial space for lease in Vaughan goes a long way to make your work easier. You will be able to make informed choices based on the recommendations of commercial property agents with years of experience in the industry. At such moments of dilemma, their expertise comes in handy to get you the best deal.