Leasing vs. Buying in Commercial Real Estate

Commercial properties take up a majority of the occupying share in terms of monetary value in the Indian Real Estate Sector. Buying versus Leasing commercial property is a crucial decision that many business needs to make. The same way as there are two sides to a coin there is no concrete or a simple solution to this answer. There are parameters to choose from and today Brantford India will guide you to whether leasing or buying which one suits your spectrum in the best way possible so you can take the right course of action for your business.

 

Laying out the possibilities of choosing the Right Real Estate Path

 

Whether you opt in for buying or leasing, Real Estate will be a hefty expense for your business. It is going to affect your cash flow, stability and long-term prospects all while having tax impacts. In order to be more economically sound, it is worth spending some time to consider which the best path is for you.

 

The Pros of Buying a Commercial Property

 

Buying a commercial property can be one of the best decisions to make in many cases. You have complete control and authority of the property because you won’t have a landlord. However, most businesses or organizations choose not to purchase their real estate outright. They also have the option of using a loan to spread out the cost.

 

  •         Asset Building in terms of Gaining Equity: As time passes by and you gradually pay off the loan your equity will increase in the commercial property. The assets on your balance sheet will also see a positive output. The potential equity can be used as collateral in the future for other business needs.
  •         Finite Number of Payments: Buying can be an attractive option in terms of long-term cash flow. Financial security being one of the best reasons to buy a commercial property.
  •         Greater Control: A landlord isn’t going to question you to every modification you make when you own the building. As long as you afford the building you are in charge of the property and completely in control of it. The rent wont escalate every year and you can’t be asked to vacate.
  •         A Rental Income Possibility: A part of the property can be leased to other tenants.
  •         Deductible Depreciation and Interest: There are noticeable tax benefits to buying, one can always deduct expenses if relevant such as interest and depreciation.
  •         Asset Appreciation: Over time Real Estate appreciates in value. By any means this is not guaranteed. There comes a time when you end up owning an asset that is significantly more valuable that it was when you purchased it.

 

The pros of Leasing Commercial Property

 

In many scenarios Leasing is the way to go. In general, it is a flexible option than buying. The following are a few of the advantages of leasing a commercial property:

  •         More Flexibility: You are not responsible of the property for years together when you are leasing a space. A loan could have a term of more than 10 years or more buy when you lease a property it can last for 5 years or less and you always have the option of breaking your lease if necessary.
  •         Upfront Costs Reduced: Leased spaces usually ask for a few months of security deposit to make up for the renovation of the space or for setting it up.
  •         Tax Benefits: Leases do come with tax benefits. Typically, the entire lease payment can be deducted as it comes off as an expense.
  •         Shared expenses with the Landlord: Repairs and maintenance are taken care of by the landlord. The common areas are usually covered under this which then helps you keep your budgeting simple.

        Fixed, Monthly Payments: One single invoice to be paid to the landlord or the property owner. Utilities and other variables are set apart.

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