The four things to consider before making a decision to buy or lease.

If you are interested in commercial real estate in Southwest Florida, one of the questions that you might be wrestling with right now is whether you should be buying or leasing the property. Which is the better choice? The reality of the matter is that it differs for different buyers. The best way to make your decision is to look at the pros and cons of each so you can make the decision that’s right for you.

The Costs

One of the most important things to consider is the cost, naturally. When you are leasing a property, the cost is cheaper than the initial cost of buying. Buying always takes a substantial amount of money upfront, and it requires that you pay the mortgage on the building. However, after the initial upfront cost, the actual cost of the mortgage and upkeep might actually be lower than if you were to lease the property. Since all properties are different, it’s important that you take the time to do the math to determine which one would be cheaper for you.

Calculate the overall costs over a long period of time. Calculate your overall costs for seven years, as well as fifteen years, to see who they stack up with one another. Many times, the difference is marginal, but it really depends on the property.

When you are determining the costs, you also need to think about your company’s current cash flow and extrapolate for the future to make sure the company will be able to afford to stay there. Ideally, your company will be growing in your new location, so this should not be a problem.

Control of the Property

One of the other main issues to consider when you are looking at commercial property is just how you plan to use it. If you are buying, you will have control over renovating and remodeling to it suits your needs. If you are going to be leasing, you will generally have far less control over what you are able to do with the building.

Those who have very specific ideas and who need to have a certain layout may find that leasing is too stifling unless they find the ideal property or an owner who is willing to allow them to make changes. Some owners may actually let you do remodeling, so long as you pay for it and agree to pay for changes to return the property to the original form before vacating.

The Area

You should also consider the area, just as with any real estate decision. What’s the surrounding location like? Will it be the type of place that will go up in value over the years, or will it remain stagnant or even decline in value. While this can be difficult to determine on your own, you can always talk with a real estate agent about the potential for the property. If it looks as though the property won’t really take off, then leasing might be a better option. If it is in a prime area and you are getting a good deal, buying now could be a very good investment.

How Long Do You Plan to Stay

Finally, think about the amount of time you plan to stay in the building. A good rule of thumb is that if you are staying for less than seven years, leasing will be a better option financially. If you plan to stay in the building for more than seven years, buying will generally be the best choice. While it might be impossible to predict the future, do the best that you can! For more information on commercial real estate needs, contact me for a consultation.

This material is based upon information which we consider reliable, but because it has been supplied by third parties, we cannot represent that it is accurate or complete, and it should not be relied upon as such. These offerings are subject to errors, omissions, prior sales, changes, including but not restricted to, price or withdrawal without notice. A buyer should be represented by legal counsel and have a professional inspection and a survey of the property certified to the buyer to verify information contained herein and all other information upon which a buyer may intend to rely. William Raveis Real Estate.