Business Owner Food For Thought: Owning Your Building vs Leasing
Business owners looking to maximize financial leverage and efficiency should take a deeper look at the rent they’re paying for their space. Owning your own building can be an effective way to reduce your operating costs and build your personal wealth while still growing your business.
While leasing is certainly a more conservative strategy – with lower up-front costs and limited commitment – it’s also a waste of resources. Yes, a down payment can be a barrier to entry for some business owners, but many don’t realize that the costs of ownership are often lower than the costs of renting. And there are programs available that can reduce your equity requirements. Long story short, owning your real estate may be more affordable than you realize.
But don’t just take our word for it: As David Cameron of City National Bank told Links Financial, “Buying commercial real estate is an excellent way for small business owners to create an independent income stream for themselves and accumulate wealth apart from their business operations.”
The attached white paper outlines the broad range of pros and cons a business owner must consider when deciding whether to own their building or lease space from a third-party landlord:
Equity / Capital Appreciation
Up-Front Cash Outlay
Supplemental Rental Income
Fixed vs Variable Costs
Tax Considerations
Stability vs Flexibility
Control Over the Environment
