If you are planning to start a business in Florida, one of the decisions you will have to make is whether to buy or lease the space needed for your company. There are many advantages and disadvantages to consider. Make this decision carefully.
Advantages of buying real estate
Many companies decide to buy real estate to obtain the land needed to start their company. Doing so may have certain advantages such as:
- Not having to deal with the fickleness of a landlord
- Owning real estate that can increase in value over time
- Owing real estate that can be used as collateral for loans
- The possibility of subletting to create additional revenue
- Slashing the overhead expense tied up in paying rent
The disadvantages of buying real estate
While there may be several advantages to buying real estate instead of renting, there are several disadvantages and risks you should be aware of as well. These include:
- Capital will be tied up in that real estate for the long term
- Property management can be expensive and time-consuming
- The value of commercial real estate in that area could actually go down
- The cost savings of buying may be negligible for the short term
- You may want to relocate your business in the future
There may be other options to consider apart from leasing or buying commercial real estate. For example, you could convert one of your existing properties into the business space you need without buying new real estate. Second, if your operations are small, you could feasibly run the business out of your home. You may also be able to outsource enough business functions to third parties that obtaining your own physical business space is no longer needed.
There are also other factors to consider. These can include whether or not a given lot has the space and utilities you need, whether or not a location will produce the right amount of traffic to your business or whether or not the prices being asked are within your budget. Overall, don’t rush into a decision. Take your time and weigh the different factors.