Buying and Leasing Commercial Real Estate

Buying and Leasing Commercial Real Estate

The decision to buy or lease commercial real estate in the Park City region requires the consideration of several competing variables.

One factor to consider is the fact that cost of rent can change from lease to lease depending on the market. On the other hand, the yearly price of owning a property tends to be more constant. It is difficult to know whether a property will remain suitable for a particular business for an extended period of time. This will depend on the type of business and its unique requirements.

Renters have less control over repairs. Conversely, buyers of Park City commercial real estate will maintain this control. Renters are at the mercy of the landlord who may elect to end the lease. On the other hand renters may find it easier to relocate than buyers if the location proves to be less than ideal.

Over time a buyer will gain equity in a property. Renters will not. Renters may be able to deduct rent as a business expense. However, purchasers of commercial real estate may be able to deduct property depreciation and mortgage interest. Taxes, however, can go up based on a number of factors which may have a greater impact on a buyer.

Finally, the decision to buy or lease might be impacted by the anticipated ease of the initial transaction. Typically, negotiating a rental agreement is much faster than negotiating a sale of real estate. Credit rating requirements are also lower for leasing than for buying. Moreover, leasing generally requires less upfront cash than needed when purchasing a property. Obviously, liquid cash reserves are important to the operation of a business.

The decision to buy or lease property is complicated and all these factors should be considered prior to making the decision in order to optimize chances for a positive outcome.