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Should you Lease or Buy Commercial Real Estate

Well the oft asked question, that actually troubles the mind always is, should go in for a lease or is it better to buyoutright? There are sure advantages and als disadvantages to both.


Let us first have a look at buying real estate.

When you decategory_IDe to buy a commercial building, that means you acquire an asset which actually adds credibility to your balance sheet. This builds up in value as time goes by and the mortgage is reparticle_ID and the value in the market appreciates further. This is one asset that can be kept as collateral security to borrow in the long term or even can generate income giving out on lease.


A good looking edifice gives the owners that important feeling stability, some power and pride of being owners. Also, there will not be any kind of increase in rent or risk of being asked to vacate or the Landlord refusing to extent the lease.


Tax benefits are the value added advantages of the asset. You can be entitled to interest deductions and depreciation on the assets. A fairly large company will also attract local tax benefits as well.


Owning a grand piece of land also gives the owner an opportunity to enter into sale-leaseback agreements. This is done mainly by large and well settled corporations who boast of good credit. This is surely an investment for the long term and can be the most liquid investment.


Leasing is also an attractive option

At the very start let us understand that leasing out of commercial property is definitely advantage for the owner.


Your greatest advantage could also lie in a property that was constructed and also improved by some other owner but the improvements made simply suit your needs extremely well. If these improvements to work for you or if you can make them fit into your view of things within a small investment, you are bound to save a few thousand dollars. At times the Landlord would willingly do up the space to your requirements and then recover costs through the rent. Whatever you can get as a as already present and not having to spend on it now would add to being to your company's benefit and gain.


Leasing is the best way to go for anyone who is thinking of expanding their business to more than one location in a very short span of time or anybody who company is taking rapid strides in it growth. This will allow you to roll the money in the business and earn at a higher rate that you have earned if you had invested in the real estate. Tax implication hit upon leasing also. The big advantage is that you are allowed to deduct the entire amount you pay as rent from the taxable income you have. Leasehold up gradations need to be capitalized and then expensed over the lease life and also the options of renewals for the first two times.