Is Buying a Commercial Property Too Expensive?

Real estate

When launching your business, you will be forced to decide whether to purchase a commercial property to rent one. In this case, getting a professional business consultant might be a good idea. Business professionals like accountants, solicitors and consultants will advise if looking for commercial properties for sale is a viable idea.

Reasons to Buy a Commercial Property

While it is not cheap to acquire a residential property, the scenario is not any better when it comes to buying premises for your business. Most commercial properties for sale are costly, but in the long run, they are an investment prospect if you decide to sell. It also offers you security in that you won’t be asked to vacate your premises by a landlord.

When you purchase a commercial property, the only downside is you do not have the flexibility you might need. If your business is successful, you might need to expand the property that seemed to have enough space just the other day. When you are tied up in a mortgage, moving out might be hard, and this will limit your capabilities to grow your business until you resell and get something big.

Once you purchase a commercial property, you will have to pay ongoing costs that make it expensive. These include maintenance costs, council rates, repairs, and other annual expenses. This means that you will be accountable for all repairs and maintenance costs that would be handled by the landlord. However, if your business is blossoming, these costs won’t be a hindrance.

The initial upfront costs associated with buying a commercial property are to be assessed before you buy. They include:

• Evaluation Fees

• Initial equity needed by the creditor

• Loan Fees

• Repairs

• Capital improvement costs

Since buying a commercial property tends to be an expense, if you cannot afford it to begin with, renting may be a better option.

Reasons to Lease a Business Space:

No Down Payment Needed

When buying a commercial property using a loan, you are required to pay a large deposit amount, usually 10-40 per cent of the total cost. On the other hand, when leasing the property, you only need to give a security deposit that is smaller than the deposit needed when buying the property. In most cases, the landlord will ask for a security deposit that is equal to one month’s rent, depending on other aspects like tenant credit. Leasing a commercial property allows you to save the cash you would have used to buy the property; and instead, invest it into your business.

No Repair and Maintenance Costs

When it comes to leasing the property, the property owner will handle all the standard maintenance in the area such as apartment repairs, HVAC and plumbing repair. In most cases, the landlord hires experienced property management and engineering group that will deal with different issues.

If you can afford it, buying a commercial space is definitely more suitable for your business.