When deciding whether to buy or lease a property for your business, the general guideline is to consider buying if the cost of purchasing is similar to the cost of renting. Buying may still be beneficial even if the mortgage payments are slightly higher—up to 25 percent more than your current rent—due to the tax benefits and equity accumulation that ownership provides.
However, if you prefer to lease, it's wise to negotiate a lease that includes an option to buy the property later. This gives you flexibility as your business grows and your needs change. Personally, I am cautious about taking on debt, so I would prefer to save aggressively to buy a property outright and eliminate ongoing rental costs.
As you plan and start your business, choosing the right location and securing a favorable lease can significantly influence your success. It's important to remain objective and not become overly attached to any single location. Continually analyze the financial implications to stay focused on both the potential benefits and risks.
If you consider selling your business in the future, ensure that your lease terms allow you to transfer the lease to new owners without restrictions. Additionally, to maximize your investment and minimize costs, you might consider subletting your space during off-peak hours. For example, renting out your space to a yoga instructor during weekday mornings can offset costs and keep income flowing when your business is not in operation.
Always confirm that your lease permits subletting and lease transfers, typically with landlord approval, and ensure that these terms are included at no additional cost.
