{"id":4561,"date":"2016-04-04T10:47:33","date_gmt":"2016-04-04T15:47:33","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/business-operations\/factors-to-consider-lease-or-purchase-of-a-facility.html"},"modified":"2024-06-06T02:21:32","modified_gmt":"2024-06-06T07:21:32","slug":"factors-to-consider-lease-or-purchase-of-a-facility","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/business-operations\/factors-to-consider-lease-or-purchase-of-a-facility.html","title":{"rendered":"Factors to Consider: Lease or Purchase of a Facility"},"content":{"rendered":"\n
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Factors to Consider: Lease or Purchase of a Facility<\/h1>\n
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\n By FindLaw Staff<\/a> | Legally reviewed by Aviana Cooper, Esq.<\/a>\n | Last updated\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

Once you start your small business, you must consider leasing or buying commercial space. Whether you lease<\/a> or purchase commercial property, you gain use of the asset. The main advantage of a commercial lease is that your initial cash outlay is lower. However, purchasing commercial real estate gives you the benefits of property ownership.<\/p>\r\n

Business owners<\/a> should consider their options carefully when deciding between leasing or buying. There are financial, business, and zoning issues to consider before signing a lease agreement or a mortgage. Consider consulting a business attorney to review your options.<\/p>\r\n

We make business formation EASY. Click here to start your free LLC.<\/a><\/p>\r\n

Leasing vs. Purchasing Overview<\/h2>\r\n

One way to decide the right avenue is through a cash flow analysis<\/a>. This provides you with an estimate of the amount of cash you would need to set aside to cover the after-tax costs of each alternative. Your cash-flow analysis should include operating expenses, probable rent increases, and moving costs. You may need to purchase additional inventory or materials for your move.<\/p>\r\n

Depending on the type of lease, your monthly rent may be less than a mortgage payment. Be sure you know what type of lease agreement<\/a> you have before signing. In a gross lease, the landlord pays for maintenance, taxes, and insurance. In a net lease, the tenant pays for any or all of these costs.<\/p>\r\n

Also, keep in mind the end of the lease. Renters must return the property to the way they entered it. You may need to remove all the fixtures and improvements you made during your occupancy at your cost or convince the landlord to keep them since they improve the property value and cost them nothing. If you own the property, all improvements benefit your business.<\/p>\r\n

Factors Favoring Leasing<\/h2>\r\n