If the time has come to launch a new business or expand your current one, you’ve likely been exploring your options around buying or leasing a building. We generally place more value on owning a home than renting one, so does the same concept apply to commercial spaces?
There’s no denying that owning a commercial space outright can help you build equity and value, but you might not be able to look past some of the following advantages associated with leasing business premises.
Enjoy Predictable Fixed Monthly Costs
When you start looking for commercial spaces available to lease in Melbourne and other desirable cities around the world, you’ll see entirely transparent costs payable each month. Sometimes, these costs are packaged in a single, all-inclusive fee. With other properties, you pay a fixed per-annum rate plus outgoings and tax.
Either way, the stability of the fee structure can provide business owners with much-needed peace of mind. You know what to budget for each month. As a building owner, by contrast, you’d need to cover your commercial building loan, taxes, property rates, and other owner-related costs, including maintenance and repairs.
Move to a Desirable Location
Not every business owner can afford to buy a commercial building in a desirable location. You want to be where your clients are, but your budget might only extend to a less attractive part of your city.
That isn’t a problem when you lease a commercial space. As long as you’re within your per-year budget, you can choose an office building or general business premises in an area that can ensure lucrative returns.
Take Advantage of Tax Deductions
When you own a building, you’re typically only able to deduct the interest portion of your loan on business taxes. However, there’s potential for you to deduct far more as a business leasing your building.
Typically, you can deduct your entire lease payment, as well as property insurance, utilities, maintenance, and sometimes even property taxes. The more money you save, the more profitable your business could be.
Move Easier
A building might be fit for purpose when you move into it, but it might not remain that way forever. Your business might grow or evolve, or you might streamline your products and services to stay profitable.
Moving as a building owner can be challenging, especially if you have to sell the building to free up your funds and purchase another. Moving as a leaseholder is generally far easier. You can end your lease or wait until the term ends and relocate without significant financial repercussions or stress.
Enjoy Less Stress
Leasing a commercial space can often be far less stressful than owning one. You can focus on your daily operations rather than worrying about putting on the hats of a property manager and maintenance worker.
Money can also be less of a concern. Since leasing generally requires far less of an investment than buying or building, it frees your funds for investment in your business.
You certainly would enjoy more freedom as a property owner when it comes to making big changes in your space, but with this freedom comes the burden of property-related pressure. So, if you’re already at maximum capacity stress-wise, now may not be the time to add another responsibility to your list.
Leasing your business premises might not seem as lucrative as buying, especially if you want complete control of your space. However, you might be more inclined to explore this option when you learn that you can deduct more on your taxes, enjoy the freedom to move, and pay predictable monthly costs.
