When looking for a location to either start up or expand your business, one of the biggest questions that business owners have to answer is ‘Do I buy or lease the property?’ Along with making sure you have the best New Jersey Rental Property Insurance coverage, you have to decide what the best course of action will be to secure your companies financial future.
Once you, as a business owner, have determined your facility needs, there are many factors to consider when determining whether you should buy or lease the property.
Control of Property
If you buy a property, you have the ability to make any renovations (as long as they are approved by the zoning board) that you want. If you were to lease, the landlord may not allow certain renovations to be made. This is important to consider if you intend to make numerous renovations to personalize your business. You must also factor in that with control of the property, comes control of the maintenance. This includes things like, leaky roofs, plumbing, and parking lots.
Long Term Cost
Leasing a property tends to be better in terms of cash flow in the starting years of your company. Generally when you lease, you start by paying a deposit and first month’s rent, versus the down payment or even lump sum of buying the property. On the other hand, if you purchase the property, should the value of the property increase, you stand to gain that value, rather than risking a landlord raising rent in an effort to build his own profit.
When you buy a property, you want to make sure that you love the location as well as the building. If you aren’t sure that the location is right for what have planned for your business, leasing may be a better option. Leasing allows for you to make the decision to relocate, whether you want to expand or if you just decide another location would be better for your business profit lines.
Real Estate Values
If you have an eye for the real estate market, perhaps you notice that the property is in an area with appreciating real estate values. If you purchase the property, you have the chance to benefit from that increase in property value. If you notice that the area has stagnant or dropping real estate value, perhaps it would be better to leave it in the hands of a landlord so you don’t have to take the hit should the property value fall.
Making the decision to buy or rent property for your business is one that should be carefully weighed to consider short term and long-term effects to your business.
At Vreeland Insurance Inc., we understand that the decision to buy or rent a property for your business can be difficult. Call us today for information on our Rental Property Insurance Plans. 877.755.3767