Is it Better to Lease or Buy?

In a nutshell, there is no one-size-fits-all answer! It is important that businesses do their own
research into which move would be the best choice.

Leasing/renting allows for a more nimble business to see whether or not a location is working
for them. If not once their lease runs out, they are free to find somewhere else to do business.
They don’t need to worry about having to sell the building or other issues that may arise if they
were landlords of the building. Of course, some may see renting as wasting money as
purchasing the property would allow one to pay down the mortgage or take advantage of tax
benefits and enjoy market appreciation. Also for renters, once the lease runs out, it is up to the
owner whether they will allow you to stay or whether they choose to raise prices; which could
put you in a pickle if you are unprepared for it. 

Buying has its advantages and disadvantages as well. An owner would also stand to benefit
from the appreciation the building may have accrue.  You get to build equity with your monthly
payments instead of building equity for the owner of the property if you were leasing. You also
run the possibility of perhaps renting out parts of the building if you choose to downsize or if it
becomes more profitable to rent than for you to use to the space. However, a lot of responsibility comes with ownership: you are on the hook for maintenance; if you have tenants, they’ll look to you to solve their problems; there can be fluctuations in the value of your property as the market changes (this could be good or bad); it can have a very large upfront cost which could be used better to further your business; and so on.  

In either case, it is crucial to have a professional and expert team to help you with your
commercial endeavors: from the broker or sales representative, to the lawyer, to the  accountant, to the commercial mortgage broker.


By: Aziz Amiri