Many businesses during their early stage of operations do not have sufficient capital that they can invest to buy a business premise or a commercial property where they can set up their office. Even if they do have the money, most business owners prefer to take a place on rent while they invest the remaining capital over other functions of the business. While this may seem like a better option to some, others might contradict this idea.

To completely understand what positives and negative aspects do buying a commercial property has, we have brought together these important points for you here in this blog of ours.

Pros

Retention of Ownership

If you buy your own property, it is evident that you do not have to share the ownership and control of your company with others. You have the core authority to run the operations and the point-of-view of the shareholders does not need to be kept in mind while doing business.

Taxation

You are allowed to use pre-tax money to make mortgage interest payments that are deductible as expenses for tax purposes.

Cash flow management

If you have obtained a loan or a mortgage to purchase a commercial property, even that is better than taking a space on rent as that helps you better manage your cash flow. This is because a mortgage payment is likely to be similar or even lesser than a rental payment. The repayment schedule can also be designed as per the needs of the business.

Security of tenure

Businesses and companies that have property taken on rent have few guarantees that they can claim and that too is applicable only until the period of the current agreement. On the other hand, those of you who have purchased the piece of land, you do not have to worry about guarantees.

Retirement

Those of you who have purchased a property for commercial or business purposes can even decide to hold this property in a pension plan. This will be a tax-efficient way of buying the land and even boosting your pension benefits.

Cons

Relocation

In case your business needs to relocate for some reason, selling a property on an immediate basis is difficult; whereas, it is relatively easier to terminate a rental agreement.

Drain on capital

Buying a property means that you need to have sufficient capital that can support this purchase and that there is still capital remaining that can be used for other purposes.

Maintenance requirements

If you are the owner of the property and if you rented or leased a portion of it, then in case of any maintenance or repair you, yourself, and not the tenant, is responsible for the upkeep of the property. This makes buying a commercial property very expensive.