Time to invest in your own building for your business

Posted By on September 10, 2015

For many start-ups, renting a business space is a smarter idea than buying property. Renting gives the new business owner greater flexibility to relocate to a space that may be more affordable if needed, to expand when needed and more. However, renting in some markets also can be more expensive in comparison to buying property, and there are true benefits associated with owning the building that your business is in. Before you make the decision to invest in your own commercial building, consider these points.

The Cost of Real Estate
First, consider the cost of real estate in your area, and compare the cost of renting versus the cost of buying. When you purchase real estate, you can lock in your property expenses for many years. In fact, if you opt for a 30-year fixed mortgage, you can benefit from having the same payment for up to three decades unless you sell or refinance your mortgage. With renting, this aspect of your overhead is at the mercy of the real estate market.

The Benefits of Real Estate Ownership
Real estate ownership gives you the ability to control a large portion of your overhead, and it also comes with other benefits. For example, you can take advantage of depreciation as a tax benefit, and you can also write off mortgage interest and property taxes. If you are renting out a portion of your property, you could benefit from an additional income stream. In addition, you can also take advantage of equity and property value appreciation.

The State of Your Business
While there are key benefits associated with owning your business property, there are other factors to consider. Buying a business property is a major commitment, and it does lock your business into a certain amount of space, a specific location and a fixed overhead for a period of time. You could sell the property or lease it out if necessary, but these are steps that can take time to execute. Therefore, it is important to consider the state of the business and to project as accurately as possible what your current and future needs may be. If there are doubts about the future of your business, it may be best to continue to enjoy the flexibility that comes with renting business space.

There are considerable benefits associated with owning the property that your business uses, but there are also downsides. Factors related to the state of the current real estate market as well as the state of your business and projections about its future should all be considered before you make a decision about how to proceed. While buying commercial real estate can be beneficial, it is not a step to rush into.