Why Businesses Should Be Renting a Property Instead of Buying?

By  //  August 3, 2022

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There are many reasons why business owners prefer renting over buying property for their business. For one, it’s much less of a hassle. You don’t have to worry about maintenance or repairs, and if something does go wrong, the landlord is responsible for fixing it. 

Additionally, renting gives you much more flexibility. One can move their business to a new location relatively easily if they need to, without having to worry about selling the property first. 

Not to mention renting is usually much cheaper than buying, especially when you factor in things like property taxes and insurance. Overall, renting is a much simpler and more cost-effective option for businesses.

The vacancy in commercial spaces is also racing at all times high. This could mean disaster for people who are willing to buy a property for their business. This could easily drain out their funds and have them holding on to an investment that could take years to get their ROI.

Throughout the 2022 midyear the commercial space is still struggling to gain tenants. Office spaces are still juggling between hybrid teams and remote teams.

So, here are some of the top reasons why you should be renting properties instead of buying:

Benefits of renting properties as a business

No Riskier Investments

If the last few years have shown us anything it is that there is a great deal of risk in owning brick-and-mortar locations – you might be stuck holding the bill after a sudden economic downturn, you might be forced to go hybrid/work from home to meet your employee demands, etc. 

So it is much preferred to let someone else field that risk. With the current sweeping changes to work habits and the rise of hybrid and work from home, physical office space is a riskier investment than ever and one that is unlikely to significantly appreciate in value over time.

Short-term payment commitment

Renting is better than buying a property for your business because renting presents itself as a short-term payment commitment as compared to buying a property for your business.

Entering a business is a risk as there’s always a chance that it’ll either fail or succeed. Business success is affected by so many things such as market acceptance, product quality, shop locations, and many other factors.

If business revenue has not been positive for a long time, the entrepreneur may decide to end the business and start a new one at a better location.

Less initial cost & Lower Overhead

When you purchase a property to start your business, there are more upfront costs associated with buying than with renting. A down payment can range from 10% to 40% of the sale price, in addition to closing costs and the costs to set up your business within the building.

Renting a business space is a better option because it will cost less initially so you can spend more money establishing your business rather than paying for the space.

According to Tiffany Homan from RentalPropertyCalculator, “When you rent a commercial space, you are responsible for a much smaller portion of the overall cost of ownership. This is because you are only responsible for paying your monthly rent, and not for property taxes, insurance, or repairs and maintenance.

She also added that renting can save your business a significant amount of money each month, which can be reinvested elsewhere.

Proximity To Opportunities

Procuring a property in prime areas or even on huge buildings may be too much cost for a business, but renting can be cheaper. Through renting, you’re still able to get the same benefits such as proximity to specialists and experts plus develop valuable relationships amongst colleagues. This can help your business develop retention, amongst those within and outside your niche.

Access To More Funds

Buying a property for a business is not exactly a good idea if you are starting out as you would need as many funds as possible to keep the business going. Renting gives business owners the liquidity and ease of moving their company if they need to move to a better location with better market prospects.

Renting is also cheaper for a business than acquiring property. Acquiring property would take years to see the rate of investment plus, with the current economic situation, can be difficult to liquidate.

More Flexibility & Mobility

Renting gives you the opportunity to be much more flexible with your business location. If your business outgrows its current space, you can simply move to a larger space without having to go through the hassle and expense of selling your property.

Tony V. from Rayming PCB said, “If your business needs to downsize for any reason, you can do so without losing a large investment.

The Bottom Line:

Renting space for a business is a wise strategy as it allows you to build up your business and get traction before making a large commitment to one spot or a certain area. On the other hand, if you were to purchase real estate for your business, you might be more locked in and inclined to force the business to work where it is. That can be hard to predict before you get your business up and running.