Is Buying or Leasing Commercial Real Estate a Viable Option? - Bhutani Group
One of the most important questions that runs in the mind of any investor is whether to buy or to lease a commercial real estate property in India. There are a variety of benefits associated with both options involved.
There is no right or wrong answer when it comes to whether to purchase of lease a commercial real estate property in the minds of a property seeker. The decision whether to buy or lease would be influenced by a lot of factors such as the capital expenditure involved, the business equity and most importantly the fund in your bank account.
There has always been a hot debate on whether to buy or lease in the commercial real estate sector.
Owing is always a good option for any business house for the purpose of setting down roots in a community. Purchasing a commercial real estate property can help an investor to bult equity structure into his operations.
With the current interest rates which are quite low, its is a great opportunity to purchase a commercial real estate property vis a vis compared to the previous times.
When an investor owns his own commercial real estate property, he can set up his own business to suit his requirements as per his needs while maintaining his equity.
Every Business needs a premises, whether to buy it or rent it completely lies at the discretion of the investor who is investing in real estate.
Buying Commercial Property
- One of the main advantages of buying commercial property is the ownership status. One can create a fit out and design that perfectly fits one business needs.
- If a commercial property is quite big in space, one may look at sub leasing to other businesses in order to generate some revenue for one’s business.
- Any ready commercial property is considered as an asset which may be sold or borrowed against getting funds if needed for the business.
- One of most obvious limitation of buying commercial property is the upfront cost associated with purchasing the property. This can definitely be a big dent on the financial status of any business enterprise.
- Keeping in mind while buying commercial property one must note that the business will stay in a fixed location which could have a negative impact on the business if majority of the customers if they are not located within the vicinity.
- There comes a case of increased liability when owing your own property as it is likely to come with costs such as mortgage and maintenance costs.
Leasing Commercial Property
- Providing greater liquidity is one of the advantages which allows your business to quickly adapt and respond to changes.
- Leasing also gives the required flexibility to move to locations which are closer to one’s clients resulting in downsize or upsize with much ease. It is also very easy to find a new commercial property on rent rather than purchasing it.
- Leasing always is a good in terms of fewer outgoings as the owner of the premises has to maintain the building and fixtures.
- Leasing into commercial real estate properties might lose one’s potential on securing long term investment potential.
- One of the biggest disadvantages is the yearly rent increases in case of leasing commercial properties.
- Leasing the property will prohibit one from acting as an owner and generating leasing income from the same.