Business – Leasing vs owning property

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This is another installment of my Business posts, geared towards those of us who are business owners or working for ourselves.

So what’s better to do ? Lease property, or own it ?

Often, I see businesses make decisions on leasing property that I find absolutely perplexing. In general, leasing (or renting) your commercial property is a complete waste of money. I understand that in some circumstances it makes complete sense. If your business is new, it makes complete sense. You don’t know if you’re going to ‘make it’ and be able to afford a long-term payment commitment. But if you have a business that is making steady cash flow and you can afford to lease a decent property, you should seriously consider purchasing instead.

In my city, I can lease a 1,000 sq ft office for $26 a sq foot. This works out to $26,000.00 per year, or $2166.00 per month. My company’s first office was purchased for $235,000.00 and had 989 sq feet of space. That first mortgage worked out to $812.00 a month. Let’s see here, $2166.00 per month for leasing something I will never own, or $812.00 a month to pay a mortgage on a property I own. Which one makes more sense ?

This is a decision that every business owner will have to make at some point. There are many different options, including everything from working out of your residential home to purchasing land and constructing a building. Whichever way we go, we seriously need to consider the pros and cons of our decisions. A good decision can create assets and wealth for your business, and a bad decision can leave you stuck paying for something that isn’t giving you any return. This is what real business is like, and the real decisions that we as business owners have to make.

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Martin Lehner

Martin Lehner is an technology professional working for an IT services firm in Whitehorse, Yukon (Canada). He has been working in the technology field for over a decade. With a degree in Business Admin and numerous industry certifications, Martin leads a team of IT professionals that provide third party support for clients. Originally starting a company to offer web development services, Martin quickly realized that clients wanted the entire spectrum of technology services. When Martin is not at work (which is not often, since his company offers 24/7 support), he is busy at home spending time with his family.

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