Some companies are e-commerce sites that may not require a physical location. But for Arizona entrepreneurs who require a brick and mortar site, finding the right location can be difficult. Another challenging situation? Deciding whether to purchase or lease the site. There are pros and cons to both sides and the main factor to consider is the company’s cash flow situation. Read on to determine which avenue to to take.
In many ways, purchasing commercial real estate is like purchasing a home. Many people decide to rent when they don’t have a large sum of money to put out as a down payment. They may not have a good credit score or they may not want to be tied down to a home when their short-term goals involve moving to another neighborhood. These are the same reasons why a business owner may want to lease a facility.
Other reasons could be that there may be a limited number of suitable facilities available for purchase, or perhaps the real estate market is showing declining property values in the area – not a good sign when the entrepreneur wants to sell the facility.
Purchasing the facility may be advantageous for company owners that want to save money in the long run and have a significant amount of money for a down payment. Company owners also have more control when they purchase the property, as they don’t have a landlord. Plus, by securing the property, the business won’t ever have to move due to lease disputes. There are also tax savings to consider.
In either case, it’s important to think about the tax implications that will apply, as well as the future projected growth of the company. It’s important to think about long-term goals and how a purchase or lease fits into these plans. It may be wise to seek advice from a commercial real estate attorney who can advise on any legal complexities as well.
Source: FindLaw, “Factors to Consider: Lease or Purchase of a Facility” accessed Jan. 17, 2015
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