5 Indicators That Your Company Should Buy Rather Than Lease
Your physical location is likely one of the most important parts of your company's continued success. But should you invest more into that physical space by purchasing real estate rather than leasing a spot? If your business has the following attributes, you might be the ideal candidate for just such a move.
1. The Company Has Capital
Obviously, one of the major factors in the decision to buy real estate is that you can afford to buy real estate. In order to invest in your own land or building, you'll need to have sufficient capital upfront for it to not cause hardship for the company.
2. Your Location Is Central
Some companies can operate in one of many different locations with good success. An office or online retailer, for instance, may simply need to stay within a good range for its employees or major clients. But a restaurant, hotel, mechanic, or support service might need to ensure that they can stay in their good location for as long as possible. Buying the land provides the stability that a location-based business needs.
3. You Can Plan for the Decade
Generally, in order to recoup their initial investment in the land, building, and renovations, a business would need to spend about 7-10 years in it. Does your business plan give you confidence that you will meet or exceed this period in your current accommodations? If so, your investment is likely to turn a profit.
4. The Local Market Is Good
The commercial real estate market goes through ups and downs. Talk with an agent about the condition and prices of local options. Are prices going up or going down? Are there sufficient properties for sale? Is the economy stable or growing? External factors like these can help you gauge whether you're likely to make a good deal and find a property you like.
5. You Want the Control
Owning property is more work than leasing it. You'll have to maintain the building and land, which requires time and investment. But you'll also have the freedom to decide what to do with it. If you want to make more than cosmetic changes, try new business activities, or update your space, you may need to own it in order to carry out your plans.
Does this sound like a good description of your business situation? If so, the next step is to learn more about your targeted real estate. Consult with a commercial real estate agent in your area today.