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Leasing Versus Buying

Leasing:

  • Lower upfront costs: Unlike buying a commercial property, the initial monetary commitment to leasing is often lower.

  • Flexibility: Since lease terms are generally shorter than the time it takes to pay off a facility, leasing provides greater flexibility to move or expand as business needs change.

  • Fewer responsibilities: As the owner of the property, the landlord is responsible for major repairs, utility services, and property taxes, which can relieve tenants of these additional duties.

  • Limited control: Leasing commercial property can limit the tenant’s physical control over the space and restrict them from making significant modifications or changes without obtaining landlord approval.

  • Elevated monthly payments: Monthly lease payments are often higher than mortgage payments on a purchased facility in the long term.


Buying:

  • Appreciation: Over time, commercial real estate owners can see their investment appreciate, allowing for a return on investment through the sale of the property.

  • Equity: A business owner that owns the physical space of his/her business will not only benefit from property appreciation but also the accrued equity in mortgage payments over time.

  • Full control: Owners have complete control over the facility's physical structure, property, and land and have the ultimate decision-maker in the space’s design and modifications.

  • Maintenance responsibility: Property owners are responsible for proper maintenance and upkeep of the space, including any repair costs, utilities and taxes, which can lead to higher costs.

  • Upfront costs: Financing a commercial property purchase can be arduous and initially require a significant monetary commitment.

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