MARTIN LANDIS

Managing Member (CEO) of Landwin, LLC

Deciding whether to buy or lease any property requires research and thoughtful planning. However, commercial properties come with their own unique characteristics and qualities that might help you make your decision whether to buy or lease. Before jumping into any real estate investment choices, it’s critical to know what you’re getting into, and what options will best fit your own individual circumstances and future plans. While commercial real estate is an excellent opportunity for investors, there are plenty of factors that will weigh heavily upon your own choice to invest.

Comparing and contrasting the benefits and downsides of leasing vs. buying commercial property is a crucial step before moving forward. In this article, we’ll talk about some of the basics when it comes to leasing and buying commercial properties. The most important thing is that you make an informed decision.

Buying Commercial Property

There are plenty of benefits and drawbacks of buying a commercial property. The success of investing in any property requires research, education, and feedback on your available options, and due to the unpredictable nature of business and real estate, conditions can change daily. A few salient factors to consider are: your financial ability to invest; taking on the long-term commitment to property management; and your willingness to assume the liability and upkeep of the property.

Benefits of Buying

When it comes to deciding to purchase over lease, it usually boils down to the financial stability the choice can bring you. Buying a commercial property comes with loads of benefits that can help secure your financial future that leasing simply cannot provide us.

  • Appreciation – Like all real estate investments, prices of commercial properties fluctuate over time. As your property appreciates, it gains value, leaving you with more of a return if you ever choose to sell, or need to use your assets as collateral.
  • Rental Income – The basic prospect of owning commercial real estate is getting renters into the unit(s) on a consistent basis. While the risks of vacancies are undeniable, the rental income that tenants can bring you is invaluable to most commercial property owners.
  • Tax Deductions – Due to interest and depreciation expenses associated with buying a commercial property, your tax situation might be greatly benefited from such a decision. Furthermore, you can usually write off non-mortgage-related expenses for the property, such as repairs and upkeep.

Leasing

Leasing is another option for those looking into commercial real estate. If you’re looking for a property to house your office, business, or otherwise, leasing might be right for you; but this will depend on a few considerations. First, the time period of the lease can greatly affect your overall expense in the property. Second, there are often up-front and monthly costs associated with leasing that usually do not yield any sort of “return.” However, there certainly are significant benefits to leasing that you should know about.

Benefits of Leasing

The benefits of leasing may outweigh that of buying a commercial property in some cases, but not all. Here are a few of the most salient benefits for those who lease:

  • Less Commitment and Lower Upfront Costs – Leasing is a relatively non-committal way to become involved in commercial property. The lower level of long-term commitment and fewer up-front costs makes it an attractive option.
  • Flexibility – Being locked into a lease agreement usually means a matter of money to get you out of it, and negotiations are common. Getting out of a purchased commercial property is a little trickier to navigate.
  • Tax Deductions – Although buying commercial property also provides a basis for tax deductions, leasing does as well. In many cases you can deduct property insurance, utility and maintenance fees, and the lease payment itself from your annual taxes.

Purchase Agreement

Get Help Weighing Your Options

Unless you’re a savant financial and real estate expert, coming to a conclusion on whether to buy or lease a commercial property takes skill, knowledge, and know-how. Based in booming Los Angeles County, CA, at Landwin we help our clients make those tough decisions that require the help of market professionals. Not only do we assist you in weighing your individual options, we can also aid you in the processes after you’ve made your decision. Our property management firm, Landwin Management, provides commercial property management and operating asset services to owners who wish to secure their commercial investments long-term but need to outsource the task. If you’d like to learn more about our services, please look over our website or contact us directly. We look forward to a collaborative journey together.

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