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Renting or Purchasing Facilities
Businesses must decide carefully whether to rent or to buy facilities.
In most cases, small business owners don't want to tie up large
amounts of cash in real estate holdings when the money could be
better used in business operations.
If you put money into a building of your own, you should charge
your business rent or interest, maintenance, insurance, depreciation,
and other expenses of owning a building. It not, your business may
show a profit when it is not really making one.
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Advantages of Buying:
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Advantages of Renting:
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Real estate may (or may not be) a good investment.
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You do not have large amounts of capital tied up in your
premises.
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You will not be forced either to leave or to pay higher rent
when your lease expires.
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You have more flexibility and can move your business to a
better location or to bigger or smaller facilities. A short-term
lease with an option to renew gives you the most flexibility.
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If you make improvements to the building, you benefit from
the increased property value.
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If your business fails, you don't have to worry about selling
your building.
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