Are you having trouble deciding whether to Buy or Lease the real estate needed for your Business?
Real estate is a capital asset that is required by the business so cash flow can be produced. When you are ready to sell your business the valuation on your business will be based on cash flow. You need to decide if it is more cost effective to buy or lease your real estate for your business.
TO LEASE OR OWN?
- Do you have the money for the down payment, if so, can you afford to take that money away from your business operations?
- What are your up-front costs of both buying versus leasing?
- Is it better to lease & put the extra money back into building your business?
- What is the likelihood that you will outgrow your current space & will need to move in the next few years?
- Are you handy? Do you want to or have time to maintain the property?
- How will it affect your taxable Income?
- How long will you be your current location before you need to expand? What if you need to downsize?
- It’s yours… You own it…You can make your own decisions…
- If you buy a property to “grow into” you can lease out a portion & receive extra income.
- No more worrying about renegotiating your lease or that the space might be redeveloped & you have to vacate.
- You can use the equity you build in the real estate to finance an addition or equipment to grow your business.
- Offers you the ability to occupy and control a property without using capital that can be better used elsewhere to grow the business.
- If you have to move you don’t have a cost & hassle of selling the real estate.
- Depending on the type of lease you have, many of the exterior maintenance issues and upkeep are taken care of by the landlord.
RIDEOUT COMMERCIAL GROUP USES CCIM’S LEASE VERSUS PURCHASE MODEL TO COMPARE THE VALUE OF LEASING REAL ESTATE VERSUS OWNING IT.
- This model compares:
- The Effective After-Tax Rate of leasing versus owning.
- The Opportunity Cost of leasing versus owning.
- Will an investment in your business produce higher rates of return than an investment in the real estate?
- Calculates the Net Present Value (NPV) & Internal Rate of Return (IRR) to determine if leasing or owning is the better option for you.
RIDEOUT COMMERCIAL GROUP WILL ASSIST YOU IN YOUR SEARCH FOR SPACE.
- We can analyze the variables particular to you situation.
- Assist you in site selection using all of the tools we have in our toolbox- to find the best location to suit your needs.
- If you are new to the area we can recommend professionals who will assist you through the steps.