The Benefits of Investing in Your Commercial Real Estate

When business executives are considering an investment in commercial real estate, one of the first issues that comes up is whether to lease the property or to buy it. The costs can be very different between these two approaches, so it’s well worth your while to consider the advantages of each, so you can have a better idea on which decision to make.

Buying versus leasing

Generally speaking, buying your commercial real estate is a more advantageous option than leasing when your business plan calls for remaining in the same location for at least seven years. If you were to add up the costs of leasing commercial real estate for a period of at least 10 or possibly 15 years, you would find that the costs amount to between 60% and 90% more than it would cost you to buy the same commercial property.

Conversely, when you occupy a commercial property for seven years or less, the total cost of your leasing arrangement will come out to be significantly less than buying the property. Studies and calculations have been done which identify the seven-year mark as the break-even point between buying and leasing. The costs which were identified in these studies take into account monthly recurring costs, upfront costs, savings on taxes, asset appreciation, rises in business equity, and capital earned from sale of the property.

Additional considerations

There may be other considerations beyond cost which affect your decision to buy or lease. For instance, you should anticipate whether it’s likely you will outgrow the property, and you should also consider whether you intend to maintain the property. If you can’t afford to tie up a huge sum of money in a purchase, then leasing may be the more appropriate option. Lastly, you should consider whether it is more beneficial to you to have the stability of a mortgage, or the flexibility of a long-term lease on your commercial real estate property.

Are you considering a commercial real estate investment? 

Investing in commercial real estate is a major step, and it requires solid financial backing. If you are considering an investment in commercial real estate, contact us at Fintrus so we can discuss some options with you for financing your investment.

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