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What are the benefits of buying and renting?
Real Estate

What are the benefits of buying and renting? 

Both buying and renting property have their own advantages, but reaping the advantages of each option in-part depends on your immediate and long-term goals for the property.

Businesses often struggle to decide which option, between buying or renting, is the better choice to make and their decisions are the majority of the time influenced by what businesses can financially afford at the time the decision needs to be made. However, to make the decision slightly less daunting, below is a quick summary of the benefits between buying and renting property.

What are the benefits of renting a property?

In the first years after opening, businesses often find it easier to rent property instead of purchasing it due to cash flow restrictions businesses starting out usually experience. Renting property affords businesses more expendable money in the first years of operation.

That is the first main benefit for businesses who decide to rent property rather than to purchase it. Yet renting property also gives businesses more options in terms of choice of the type of business space they are looking for and offers businesses more flexibility in the event that they decide to relocate to a different area once a rental agreement has run its course.

Aside from the financial benefits of renting, businesses are also left with fewer responsibilities in terms of the maintenance and upkeep of the rented property. Property renters usually ensure that the property is renovated, cleaned, and in good working condition (in terms of plumbing and electrical systems) before you take possession of the property.

In other words, when you rent property you do not have to concern yourself with maintenance costs or repair bills. Renting property significantly reduces the initial costs of acquiring property, especially in relation to buying.

You are not faced with having to pay an initial down payment on the property or pay real estate taxes as you would have had to do if you had purchased the property. The benefits of renting property are however most substantial for small businesses or businesses starting out.

What are the benefits of buying a property?

If we compare the benefits of renting property versus buying property, one of the first and most significant advantages of buying property is that it is dramatically cheaper in the long-run than renting the same property over a number of years.

Buying property is in most cases the more cost-effective option in the long-run if you are able to fix your monthly mortgage payments over a period of ten years or more. This will help you keep costs to a minimum and protect your business from rising rental payments you would be subject to as a rental tenant.

Owning property rather than renting it can also give you and your business a sense of security in knowing the property is entirely yours and you would not have to deal with lease renewals and unexpected rental increases.

Owning a commercial property that increases in value can also be considered a sound long-term investment in the event that you or your business would want to expand, renovate, or extend the building in the future.

Owning property rather than renting it makes all these potentialities so much easier to manage, and if your business experiences cash-flow problems along the way you always have the option to sublease a portion of the property in order to earn additional income.

Which option affords you the most advantages?

Investing in real estate, whether you are buying or renting a property, is never the wrong decision. According to Nagabhushanam “Bobby” Peddi, TRUiC CEO, “Regardless of whether you decide to buy or rent property, the benefits your business will reap from having a physical property in its name cannot be ignored.

Buying and renting each has their own advantages, but it’s up to individual business owners to decide which option is best suited to their individual circumstances, and with the right advice they will make the right decision”.

Deciding between buying and renting is all about figuring out which option will afford you and your business the most advantages in the short- and long-term, and you never know, you can always decide to rent first and buy later when your business is in the financial position to do so.

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