Deciding between Leasing or Buying Commercial Real Estate

The revival of the economy globally meant that the business owners, big and small, had to rethink the strategy to operate post-COVID times while considering their financial resources. With the reopening of businesses and offices, the owners are in a dilemma between either buying the commercial estate or leasing it to manage their work and provide a productive workplace to their employees within the financial acumen. Cash or loan can be the option while buying commercial real estate; leasing is to get a property on rent for a certain period. One of these options can be opted based on various factors, the scope of investment, and the current circumstances, which may change in the future.

Points to Consider before Buying or Leasing

As the businesses need commercial spaces such as factories, stores, warehouses, and even offices, which can be either operated from an owned property or the leased space. Both renting and leasing are suitable options depending on, number of factors –

·    Payment – Buying is more suitable for someone who can pay the entire amount upfront or are ready to take a loan with a percentage of down payment while managing the EMIs regularly. The Industrial Property Lease can be better if the Property is too expensive, but the monthly rent can be high.

·    Asset Creation – Buying a property means adding the fixed asset; the value will most probably go through appreciation and selling it in future gain. Leasing out a property will not add to the fixed assets, as it will be a temporary agreement.

·    Income Through Rent – The owner can rent out the Property's unoccupied or unused area for additional income. But the leased Property cannot be further sublet to charge the rent.

·    Benefit in terms of Tax – The owned Property's interest and depreciation difference can be considered for a tax break to save some money, which applies to the lease payment as well, including on its maintenance and other minor costs.

·    Control over Property – the control over the owned Property is absolute, and the business or the person can make decisions about their property as per their needs and wishes. While the leased Property cannot be modified, changes cannot be made without the landlord's consent.

·    Being Eligible for Financial Support – Qualifying for a considerable loan amount is not always easy, especially for commercial real estate; in this scenario, leasing the property can be a more practical option.

·    Possible Liabilities – Though being the owner of a property can be immensely satisfying. Still, in case of an accident, the owners are directly liable to face the lawsuit and take complete responsibility, which usually is a financial cost/ burden. On the other hand, in the case of a leased property, the business/ person largely remains free of such liabilities.

Know more about Commercial Real Estate for Your Business

If your business is based in or around Houston, then connect with Black Label Commercial Group to let help you decide between buying or leasing from the commercial real estate sale.

Location: Industrial Property Lease, 1610 FM 1960, Houston, Texas 77073