When starting a business whose nature requires you to have a physical presence, you need to have a land or property where you can start your operations from. It is a crucial decision that you as the owner need to make about your company’s future. One thing that concerns most owners is whether they should lease or buy the property.

There are many things that you need to consider before you take a final decision. Today, here in this blog, we have explained to you what challenges leasing a commercial property can present, which makes buying a much feasible option.

Leasing requires you to pay rent which is less stable

Leasing a property is not suitable economically and poses a challenge to a start-up business. You need to pay rent as long as you have signed the contract for using the property or until you get priced out by rent increases. It is also important for commercial real estate tenants to negotiate the terms of the lease in order to set the payment conditions for the security deposit and rent.

On the contrary, if you purchase a building with the help of a fixed-rate mortgage loan, then your payments are stable and do not change with whatever the current situation of the economy is.

Leasing requires you to relocate your business once the contract ends

This is one of the main drawbacks of leasing a property. Once the contract ends and upon renewal, the landlord asks you to pay more rent and it becomes unfeasible for you to continue your operations on the same place. This leads to all sorts of setbacks and complications that will cause some disruption in your business and its connections.

There could be machinery that is heavy to move, the new place is expensive, your suppliers and customers both have trouble finding the address, or the place is far away because of which employees are unwilling to continue with the company. You wouldn’t face these challenges if you bought your own commercial property.

You miss out on the economic aspect of having to own a property

If you own a property for your business, it is represented as your equity in the financials. This equity can help you obtain credit. You can make improvements to the property or the building on it, which will also be counted under equity or you can use it as a nest egg when the time for retirement comes near.

On the other hand, a leased property only offers you a limited amount of benefits. It is not counted as equity and the improvements you make do not help you. In fact, they help the landlord.

If you are a start-up or an established business that is considering options for leasing but is confused, then contact KLB Business Funding. They are experts in this field and are sure to guide you in the best possible way.