Which is better? Renting or buying commercial property?

Which is better? Renting or buying commercial property?

Any decision related to commercial property is fairly big given there could be a substantial investment. There are so many factors to consider. The biggest decision is whether you should rent or buy. When you consider these options you need to ask yourself several questions.

Firstly, how long are you going to be spending in the location? Are you likely to move in a couple of years time? If you’re likely to remain in the location for 10 – 20 years, the average length of a mortgage, or longer then buying could be a very serious option, however if you’re likely to move in a few months or a couple of years then buying doesn’t make sense. It’s often very difficult to break out of a mortgage and the fees involved could end up costing you significantly.

You should consider buying if you know that your business size is likely to remain the same. There would be nothing worse than buying a property and then discovering you need to buy or rent another one because you’ve run out of space. That said, you could always buy a property that will allow you to grow should the need arise. If you do this then you need to realise that you will need to be able to cover the property’s rent and meet your ongoing commitments. It is worth analysing your fiscal position.

The advantage to buying a property rather than renting is that you are not at the whim of a landlord. You won’t suddenly find yourself turfed out of your office or shop space. It’s all yours. It can also secure your financial future and these economic times, that’s incredibly important and if there is a downturn in the economy, you have a fall back option. That means that if you suddenly find that business slows down, you could rent out the space and generate an income that way. Of course, this depends on the level of confidentiality you have in your business. Many businesses are starting off in shared spaces and it’s possible to refit out your office so you could still maintain a level of privacy.

The main reason you would rent a property is the upfront cost. Commercial property can require a significant investment, although it’s worth noting that even though there is an upfront cost, that can save you money in the long run and give you savings should there be a downturn.

If you are looking at buying a commercial property, I’d love to talk to you and see how I can assist you.

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