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Choosing between leasing and buying commercial property

On Behalf of | Jul 19, 2016 | Commercial Real Estate |

Entrepreneurs in California and around the country often face some important and difficult early decisions. While business owners may not be short of advice when deciding on the appropriate business entity to adopt or what kind of order fulfillment system to use, choosing a location for their business venture is a decision they sometimes make on their own. However, blunders made here can result in bigger problems later, and entrepreneurs may be wise to avoid speedy decisions when choosing where to lease or rent commercial space.

Renting a piece of commercial property offers entrepreneurs flexibility. Leasing a building can be accomplished quickly and relatively inexpensively compared to buying, but owners have more control and enjoy long-term benefits like the potential for appreciation. However, owners should restrict their interest to neighborhoods that are likely to improve in the future as it can be very hard to sell when property values start to tumble.

Building maintenance is another important consideration. Renters are simply able to call their landlords when work needs to be done, but property owners must bear the costs of repairs and upkeep themselves. Renting may also be a more prudent option than buying for entrepreneurs who feel that their business may grow rapidly and could require larger facilities within a few years. However, this level of flexibility comes at a price. Business owners who buy stores, offices or warehouses may find it easier to secure business loans and lines of credit.

Experienced real estate attorneys may be able to help entrepreneurs to avoid common commercial property pitfalls by conducting extensive due diligence on their behalf before any leases or sales agreements are signed. Attorneys could also work to ensure that regulatory, zoning or land use issues do not prevent leases from being signed or purchases being consummated in a timely manner.