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When should you lease a business space instead of purchasing?

On Behalf of | Jun 27, 2018 | Commercial Real Estate

There are advantages and disadvantages to consider when deciding whether to lease or buy a piece of commercial property for your business. In this article, we’ll examine the various conditions that — when they exist — you may want to consider going the route of leasing.

Factors that support the decision to lease when searching for a business location:

Only a limited amount of capital is available to invest in office or business space

When a business has only a limited amount of cash on hand to secure a location, leasing is probably a better option. In order to secure a lease, your business will only need to pay one month of rent and the security deposit. This is a lot less expensive than the large down payment required to purchase a property.

Lack of a strong credit rating

If your business is relatively new, you may not have established a strong credit rating yet. This could make it easier to secure a lease than a loan to buy a property.

You can’t find the right property to purchase

You may need to wait before you find the perfect property to purchase. In the meantime, if you can find a suitable rental property, you can lease a space to operate your business until an option to purchase a property comes available.

You expect your company to grow

If you expect your business to grow and require more space in the future, it could be a better idea to lease space until the size of your company has stabilized.

These are four factors indicating that it could be a good idea to lease instead of purchasing a commercial property. However, you may have other reasons that influence your decision-making process. Sometimes, for example, the nuances of Texas real estate and zoning laws will affect a person’s decision to lease or buy when searching for a business location.