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Should I Buy or Lease a Building for My Business?

There are pros and cons to buying or leasing a facility for your business.

As a business owner, it’s important to think about a few things:

  • How long do you think you want to be in that particular building or location?
  • Will you eventually outgrow it?
  • Are you willing to take on long-term debt?
  • Will you want to maintain ownership of the building even if you sell your business?
  • Could you consider leasing space to another company for extra income?

Estimating the anticipated growth of your company and the amount of time you think a particular building will meet your needs is a big consideration. If you foresee your building being adequate for 15 years or more, purchasing may be the right option for you. You will build up equity and have the opportunity to rent space to another company for extra income if you have additional square footage available.

If you think you’ll outgrow it soon and don’t have the ability to add on to your current space, leasing may continue to be the better option. Leasing also provides the benefit of lower overhead for your business and you can often write off the payment for tax purposes.

Looking ahead to when you’re ready to retire, if you own the building, you will need to consider if you will sell it along with your business or maintain ownership of the building itself. How close you are to retirement may also play a role in deciding whether or not you’re willing to take on the long-term debt real estate offers.

Consult your accountant to determine if purchasing or leasing might be the best option for you, then give us a call!

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Al Saylor