Business owners often find themselves deciding whether to buy or lease commercial real estate, Portland offers many commercial and mixed use properties to satisfy multiple needs. The main goal is to properly identify the right timing to ensure the highest possible gains. Unfortunately, there is no such thing as a “one size fits all” type of solution when purchasing commercial real estate. This article will highlight the pros and cons associated with leasing and buying commercial property.
If considering buying definitely think long term. What today is considered a “hot” area may later become a “not” area. Locations which are considered to be trendy today, may experience a stall in gentrification. The reverse of this is also true, you may indeed purchase in an area that may soon end up becoming the “hot” place. Whenever possible check to see if the government offices, are showing any plans for future developments such as, metro stations, police stations, hospitals, etc., this will be a helpful marker to determine if this area will be suitable for your needs.
Many people may find that in order to buy commercial property they will tie up their liquidity. If the market slows down or enters a slump, selling the real estate can be a bit more challenging. It can also be said that a property owner has a tangible asset to sell should an emergency injection of cash be needed. As a property owner, obtaining a loan on the property may also be an option in the future when emergency cash is required.
3. Cash flow
Sometimes property owners may find themselves at the mercy of their tenants, if the tenant stops paying rent the cash flow inevitably suffers. If unexpected and expensive repairs are needed on the property, cash flow will again become compromised. It is always advisable to have a bare minimum of six months worth of financial reserves to cover the rental or mortgage payments. Sharing or subleasing commercial space may also help with cash flow in some scenarios.
As the owner you will have much more control. For example, a tenant may find that when the lease rolls over, they now have to pay a higher rental based on the actual market trend. When you own a property you do not have to worry about the lease roll over and you can enjoy the tax benefit on depreciation.
Whether you buy or rent, the choice will simply be based on your economics. Speak to a professional real estate expert to properly help you conduct an in depth rent versus own analysis. Do make sure to account for projected business growth forecasts , real estate market trends, and tax benefits for depreciation. By sitting down with an expert to help you study your different options and scenarios, you will be able to make wise and informed decisions. Determine how much you are willing to invest in commercial real estate, Portland commercial property professionals will help you analyze your budget in order to help you find your best deal.