When one considers setting up a company, the question always arises as to whether it is better to buy or rent in the place where you are going to start your business. From Lasose Properties & Investments we explain the advantages and disadvantages of these two options so that you can choose which is most convenient for you.
In general, to decide whether to buy or rent a premises, three factors must be taken into account: the type of business, the budget available and what risks we are prepared to take on.
What are the advantages and disadvantages of renting premises?
- Renting means a much lower outlay of money.
- You can consider moving to another location once the renting period is over.
- You can negotiate maintenance costs with the owner.
However, not everything is an advantage.
- Renting is a monthly expense for the duration of the contract.
- If the business does not go well, you must give two months’ notice if you do not want to pay the penalty agreed in the contract.
- If you do any reformation work, you are making an investment in premises that are not yours.
- The cost of the rent is unrecoverable.
What are the advantages and disadvantages of buying premises?
- If no financing has been requested, there is no monthly cost.
- You are not obliged to move from the premises under any circumstances.
- All the reformation work and investments you make in the premises will become part of the business’ assets.
- The premises can be used as a guarantee to obtain bank financing.
- You can also consider the possibility of having extra income by renting it out.
- If the business is doing well and you have to change your premises because of location or size, you can always rent or sell it.
But buying premises also has its drawbacks:
- If you cannot afford to buy the premises in cash, you will have to assume the costs of the mortgage loan.
- You will have to pay all the costs of repairs and maintenance.
- You must assume both the monthly and annual costs of the premises.