Rent or buy?
That is a fundamental question facing many decision makers focused upon property considerations. Pulling the trigger on either one of those options is often an exacting and difficult challenge.
And as important as getting things right can be in a scenario involving residential property (to wit: Should I just opt for another apartment lease or finally take the plunge into home ownership?), it can literally be a make-or-break decision for a business.
We duly pointed out the importance of getting it right in our immediately preceding blog post, where we noted that making the proper lease-or-buy decision regarding commercial real estate “is of outsized importance to most business enterprises.” Our October 7 entry stated that, for many East Valley, Maricopa County and Phoenix metropolitan-area businesses, “careful due diligence across a universe of considerations” is a given prerequisite to a sound property-related outcome.
Business tenure is often one such consideration. A newly formed enterprise, for example, often lacks a stockpile of cash and a proven credit history to secure a large loan on favorable terms. As a result, some start-ups prefer to lease business premises in the early years of their existence. Doing so looks better on the balance sheet, and rent is a deductible business expense.
Of course, buying real estate can clearly be a preferred strategy, depending on a company’s assets and cash flow, expected appreciation of a property and anticipated savings over the long term.
Myriad other considerations can compete for attention, too.
Here’s one: If company principals are comfortable with fully maintaining a property across all dimensions, buying might seem to be a comparatively attractive option. If not, a commercial landlord will typically attend to most maintenance/upkeep needs.
And here’s another: Commercial property values might be rising briskly or, conversely, falling markedly in an area that is attractive to business owners. That will likely play a central role in a company’s decision whether to buy or rent.
A proven commercial law firm can help business principals comprehensively identify and evaluate material issues that loom large in the lease-or-buy decision-making process. Sound legal counsel can help a client take actions that optimally promote company interests.
Call Cook & Price, PLC today at 480-407-4440 or email us through this website.