To Lease or To Buy Retail Space: Some Pros and Cons

It’s an essential question that every business must face: “Should I lease or buy space?” The answer depends on what type of business you have, your budget, its location and more. Here is a look at some of the pros and cons to consider.

Leasing vs. Buying

Traditional loans require a down payment of 10% to 40% of the property’s value, making it much more substantial than the security deposit typically needed for a retail property for rent West Chester PA. When you lease, that money can go into the business instead of to the bank, allowing you to take advantage of opportunities that arise. It also means you can qualify for a bigger loan should you want to expand. Owning space does have one great advantage over leasing, which is building equity. Like buying a home, you can also qualify for loans based on that equity.

Flexibility and Growth

If your business depends on location to make a go of it, like a restaurant or retail store, you may not be able to afford to buy property in a trendy mall or shopping area. Lease payments are typically much more affordable, allowing you to target success by opening your doors in a popular location. You can add expansion options to a lease to accommodate growth, or, if you are unable to grow, you have the flexibility to move at the end of the lease. If you own the property, you are limited by that property’s size, period.

Repairs and Maintenance

There are often fewer headaches to deal with when you’re leasing. The owner is usually responsible for maintenance and repair, including both interior systems such as the HVAC, and exterior needs such as landscaping. Like owning a home in an HOA-controlled community, you will still pay for these services, but you don’t have to manage them. If you own property, you typically pay a property manager to maintain the building and grounds.