Owning or leasing commercial property is a decision that every commercial real estate agent must help a business owner or entrepreneur make at some point in their career. As Commercial Director at M&D Real Estate, I have seen the impact that this decision can have on businesses. The decision to own or lease commercial property is a complex one, as it involves weighing numerous factors such as the size and nature of the business, its financial situation, and its long-term goals.
In this blog post, I will delve deeper into the benefits of owning versus leasing commercial property to help commercial agents assist businesses in making the best decision for their business. Whether you are working with a small business owner who is just starting their business or an established business looking to expand, this post will offer valuable insights to guide their decision-making process.
One of the biggest advantages of owning commercial property is the long-term cost savings it can provide. While the initial investment of purchasing property can be higher than leasing, owning a property can save businesses money in the long run.
When a business owns commercial property, it eliminates the need for rent increases and lease renewals, which can be a significant expense for businesses leasing commercial space. Rent increases can take a sizable portion of a business’s budget, especially if they occur frequently. Lease renewals can also lead to additional costs, including legal fees and renovation expenses to comply with new lease agreements.
Owning commercial property provides businesses with an asset that can help them grow and expand over time. Real estate values tend to appreciate over time, which can provide a significant benefit to businesses that own their commercial property. As the value of the property increases, so does the business’s equity, creating a valuable source of funding for future business endeavors.
Equity is the difference between the property’s value and the amount owed on any outstanding loans or mortgages. As businesses make mortgage payments and property values increase, their equity in the property grows. Business owners can use this equity as collateral for loans or other financing, providing a valuable source of funding for business growth. Additionally, businesses can benefit from the appreciation of their property by selling the property at a higher value than they purchased it, providing a significant profit.
When a business owns its commercial property, it has complete control over the property. This means the business can make modifications or improvements to the property without seeking permission from a landlord. Therefore, the business has more control over the overall appearance and upkeep of the property, which can be important for maintaining a professional image.
Owning commercial property can provide several tax benefits for businesses. For example, businesses can deduct mortgage interest and property taxes on their tax returns. Moreover, businesses can depreciate the value of the property over time, reducing their taxable income. These tax benefits can be significant and can help businesses save money over time.
Owning commercial property also provides stability and predictability for businesses. With ownership, businesses have a fixed location that they can rely on for the long-term. This stability can be important for businesses that rely on location for their success, such as retail businesses. Therefore, owning a property provides predictability in terms of expenses, as businesses have a fixed mortgage payment and do not have to worry about rent increases or lease renewals.
In addition to the significant upfront investment, owning commercial property can also be a risky financial endeavor. Property values may fluctuate, and there is no guarantee that the value of the property will increase over time. In some cases, a business may purchase a property only to find that its value has decreased significantly, leaving the business with a financial loss.
Moreover, owning a property also means that the business is responsible for all maintenance and repairs. This can be a significant expense, especially if unexpected repairs are needed. For example, if the property’s roof needs to be replaced or the foundation requires repairs, the cost can be significant and could impact a business’s financial health.
Another factor to consider is the flexibility that comes with leasing commercial property. For example, easing provides businesses with the ability to move locations more easily. This can be important for businesses that need to be in a specific location to reach their target market. Additionally, leasing provides businesses with the ability to adjust the amount of space they rent. This flexibility can be important for businesses that experience fluctuations in demand.
The decision to own or lease commercial property depends on a variety of factors specific to each individual business. While owning commercial property provides many benefits, including long-term cost savings, equity building, and tax benefits, it also requires a significant upfront investment and ongoing maintenance.
M&D Real Estate can help commercial agents learn which option is better for their clients and anything else they may need to know while working in the industry. The firm provides weekly training sessions specifically geared towards commercial real estate and works. Additionally, the brokerage works with five-star commercial agents who are willing to collaborate and mentor agents who may not be as familiar with the commercial real estate industry.
Furthermore, at M&D Real Estate, we provide our commercial agents with the best possible support, training, and resources to help them succeed in their business. Our focus on high-level support, comprehensive training, advanced marketing and technology, and fostering a strong team culture creates an atmosphere where our agents can excel. Moreover, our ability to handle all types of commercial listings and generate leads sets us apart from other brokerages in the Dallas-Fort Worth Metroplex.
Choosing M&D Real Estate can make all the difference for commercial agents looking to build their business and achieve their goals. Our team of agents is always happy to share their experiences and the success they have achieved as part of our dynamic and fast-growing firm. If you’re interested in learning more, please don’t hesitate to contact any of our agents. They would be delighted to discuss how M&D Real Estate can help you succeed. Apply to M&D’s commercial division today!
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