The old adage was real estate was always a safe bet. As the markets have shown over the past few years, that isn’t always true. However, if you are looking for commercial space, you may want to consider whether it is better to buy or rent. Here are some things to be thinking about when you make this decision:
- Are you going to be in the same place for a long time? If you foresee yourself being in the same building for a long time, buying a space may make more sense than renting it. However, if you are unsure of how long you are going to be someplace, what size your company is going to grow to, or if the location you have chosen is going to be permanent, then renting may be best.
- Can you get financing? Are you a good credit candidate? If you have poor credit and/or low income, you may not be able to get financing. Without financing, you will have to rent. In addition, you need to be thinking about a down payment. For a commercial loan, you may need up to 40% or more down payment for a commercial space.
- Are you still growing? If you see a lot of growth in your company in the next few years, it may be better to lease until you know how big your company is going to be – especially if you are a service industry that needs desk space for employees. However, if you are a restaurant or other industry that can multiply into more than one space, then growth may require another building so buying may be good.
- Can you sublease? If you find the perfect space but it is too large for now, can you sublease the unused space until you need it? If so, buying may give you the security of owning a space and added income from a sublease.
- Do you have a good business plan? If you are looking to finance, most lenders will require a business plan to show why you should get a loan for commercial space. If you don’t have one, contact me today for references to individuals who can help you with one!
As always, if you have any questions about renting space, please contact me, your Denver business attorney at 720-258-6647.