Which Is A Better Option - Buy Or Lease A Commercial Property?


Which Is A Better Option - Buy Or Lease A Commercial Property?

August 12, 2021

Getting the right commercial property is a hard enough job. However, what constitutes a much harder decision for many is to decide whether commercial real estate for lease is a better option or if it is wiser to buy a commercial property. To make a comprehensive decision it is best to analyze the pros and cons of both situations.

Pros Of Buying a Commercial Property
If you are someone who believes in going for the choice of commercial property for sale, then the pros are quite flattering:

  1. Ownership: One of the major benefits is that you get to have complete ownership of the property. It means that you get to enjoy all the rights without being answerable to anyone.
  2. Avoid Longer-term Monetary Outgo: When you choose commercial office rental, instead of buying the space, the monetary dependency continues to stretch. You have to pay every few intervals, and that is quite a burden. In case you buy the property, that gets taken care of.
  3. Mortgage The Property In Need: When you own the property, automatically, you have the rights. It allows you to keep the property under mortgage if need be so. Rental property does not confer you these rights.
  4. Availability: With rental or leased properties, this is a very big issue. However, when you buy a space that serves as your haven, you can use it whenever there is a need.
  5. Tax Benefits: One of the biggest benefits of buying a property is that you get to savour the tax benefits as well.

Cons Of Buying a Commercial Property:
Some of the most prominent cons include:

  1. Upfront Spending: Buying a property will require you to make a rather big down payment and this might block a lot of cash.
  2. Difficulty to Qualify For Financing: Finding the right loan provider for the commercial estate is tough, provided the interest rates shoot high up every few quarters.
  3. Penalty In case of Prepayment: Buying a commercial property and then choosing to prepay often involves big charges in the form of penalties.
  4. Liabilities: Buying a property would not only mean complete ownership but would also indicate that you are responsible for everything that goes on within its boundaries.
  5. Losing out on Capital: It is a gamble because you could any day lose out on the value of the property if its value declines.

Pros Of Leasing A Commercial Property:
If you want to lease a commercial space, some of the best reasons include:

  1. Controlled Cash Flow: The amount of cash in transit is less, and you are liable to pay only during fixed intervals.
  2. Maintenance Charges: In most cases, the leaser is responsible for maintaining the property, unlike when you would need to maintain the property if you were the owner.
  3. Flexibility Of Location Change: If the requirement arises, you can easily shift and can end your lease agreement.
  4. Credit-Based Rating: Opting for a commercial space for lease does not require you to maintain a CIBIL score.
  5. Depreciating Value of Property: You do not lose out on any property value as you can choose to exit the lease anytime you feel the need.
  6. Loan In Favor Of Hypothecation Of Stocks: You can easily get a loan from banks for the Hypothecation of stocks when you choose to run a business from leased property.

Cons Of Leasing:
Some of the major reasons why you should avoid choosing office space for lease or even any other kind of commercial property is:

  • Zero Equity: You cannot claim any kind of property appreciation unless mentioned in the agreement.
  • No Scope for Passive Income: You are not authorized to rent out the property and earn anything because you do not possess ownership rights.
  • Expensive: Leasing or renting out commercial property is expensive, and the price increases by a certain percentage after each year.
  • Zero Control: Even if things do not fall into place, you have to continue paying the rent.

If you are looking for options that are great assistance when it comes to choosing a commercial property for sale or office space to rent or lease, choose Brigade Group. They have some of the best choices in this market and will also fit your budget the best!


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