Building vs. Leasing: Which is Right for Your New Business?


WASHINGTON, D.C. – (RealEstateRama) — Selecting where to place your business plays a big role in the success and your overall profits. You’ll want a location that draws people in; for example, a shopping center is a great place for a fast food restaurant. Hungry shoppers will be drawn to the idea of a quick bite to eat. There are many choices available in terms of actual premises (meaning the building and property location). You can lease an already established location or build your own business on a purchased plot of land. Each has a set of pros and cons, which are covered in the paragraphs below.

The Cost of Building Your Business

In general, there are two ways to build your business from the ground up. You can lease a plot of land and build a structure, or you can purchase a plot of land and build a structure. In the long-term, owning a property outright is cheaper, but you may not be able to afford to buy in which case monthly payments are more cost effective.

Once you’ve determined a location (remember: you should choose a location that makes sense for your business and is zoned for your business), you can begin to build. Although leasing may seem like the least expensive option, it does require a monthly payment each month for the life of your business. An owned building, even if it’s a mortgaged property, can eventually be paid off resulting in no monthly payment.

And there are some ways to skirt extra costs, such as building with metal or choosing prefabricated buildings.

Metal building cost – The price of raw steel fluctuates, so lock in your price as soon as possible because it’s almost guaranteed to go up if you don’t. It’s important that you don’t seek out the cheapest option when choosing a metal build, but rather look for the longest-lasting and highest-quality option. You can save money by purchasing components, such as windows and doors, at direct price or by purchasing them locally. It helps if you work with a steel building expert.

Prefabricated buildings – Prefabs, or modular buildings, reduce setup time but they may be limited in size and design. If you want a unique build, this is not the way to go. And, it should be noted, that many modular building companies will try to sell you on unnecessary components and bundle things into the deal that you don’t need.

The Cost of Leasing a Building

When you lease a location, you’re typically leasing the land and the building. This bundles the cost of both into one payment, which for some is the more sensible option. This payment is a lifetime commitment, rather the life of your business commitment. It’s unlikely that the owner of the premises will ever sell you the location.

Design is both a pro and a con of leasing. You may love a building’s design, such as large windows and interior paints and layout; it’s ready to move in and set up shop. Or, you may loathe the look, in which case you will need to discuss changes with the property owner. The owner may not be willing to allow you to make structural or design changes. You’ll want to discuss any changes before signing the lease, so you’re clear on what the owner allows.

Having a premises that suits your needs is essential for the smooth running of your business. By building, you’ve created a structure with practical considerations in mind. Leasing may mean changes need to be made to accommodate these considerations. Both methods have their pros and cons, and what is right for one business may not necessarily suit another. Give careful consideration to your options to ensure the smooth running and success of your future company.

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