Lease or Buy? Your Business Property Decision In Adelaide Lease or Buy- Your Business Property Decision In A | Página 13
Pros of Buying
Building equity: If you pay all cash, you own 100% of the property right
away. If you take out a loan, your down payment and monthly payments
build equity in the property. If you refinance or sell the property, your
equity is the difference between the property's fair market value and the
remaining loan balance. Your equity in the property will help build the
overall value of your business.
Appreciating asset: Owning commercial real estate gives you the
opportunity to benefit from capital appreciation—the increase of your
property's value over time. The rate of appreciation varies with the
inflation rate, local supply and demand conditions, interest rates, and
other factors.
Rental income: Typically, a business that buys commercial property
occupies at least 51% of it. This is because lenders classify the real estate
as an investment property when the ownership share is less—a factor
that makes it harder to qualify for the loan. If you have leftover space, you
might want to rent it out to tenants and create a secondary income
stream. For instance, if you buy a small building, you might rent out the
ground floor to a retailer, restaurant, travel agency or other business.
Tax breaks: You can deduct interest, depreciation and nonmortgage-
related expenses on your commercial property. For example, if you are in
the 20% tax bracket, you'll reduce your tax bill by 20 cents for each dollar
deducted. You can't deduct expenses associated with a mortgage, such as
origination fees or closing costs. Only the interest portion of your
mortgage payment is deductible.
Control: When you own property, you have control over it—within the
confines of zoning restrictions—which means you don't have to negotiate
with a landlord if you want to reconfigure the space. You'll also make
fixed monthly mortgage payments, not a rent payment that can be
changed whenever a lease expires.
Cons of Buying