Wherever business takes place, every business owner should initially and periodically weigh the pros and cons of buying or leasing their workspace.
Perks of buying workspace
Low-rate environment
As commercial rents increase and mortgage rates continue to be at 50-year lows, business owners should evaluate whether buying their space is a better option than leasing it.
For example, if the building where your popular and long-established store conducts business gets great foot traffic on Main Street, you might consider purchasing that commercial property. You would help protect your business from rent increases or, worse, the need to relocate due to the property being sold.
Added value
When you buy your business facilities, you could add immediate value to your company. The business’s value would include not only its product, client base or customer list but also the building, parking lot and warehouse where its business activity takes place.
Fixed costs
Knowing your monthly cost of facilities – maintenance, utilities, mortgage, cleaning crew, etc. – enables you to more accurately project expenses and simplify business planning.
Tax write-offs*
You may be able to deduct mortgage interest on the company tax forms the year they’re incurred, the same with local and state tax assessments.
Do it your way
When you buy the property, you can make it your own without losing your investment in upgrades.
When you should lease
Not every business should buy its workspace. For example, start-up businesses with constricted budgets should probably use available cash to market and grow their business.
Leasing company space when cash flow is unstable or company cash is tied up might be in your best interest. You could put excess cash to other uses like purchasing equipment or hiring more staff to boost production.
In addition, finding the right location for your business takes time. Keeping your business flexible to make the right moves is ideal for certain business owners.
Your bank can help!
It’s a smart business decision to discuss commercial real estate options with your banker. These financial business professionals can guide you toward taking your business to the next level. Before you make a decision to buy or lease, consult the professionals at Amegy Bank at 281-320-1418 to chart a course for continued business success.
*Consult your tax advisor about tax deductibility. The information contained herein may not represent
the views and opinions of Amegy Bank or its affiliates. It is presented for general informational purposes only and does not constitute tax, legal or business advice.