Where many heavy spending CEOs aim at buying their own company
buildings, some savvy individuals have better plans in the shape of commercial real estate leasing.
Being a tenant not only reduces your upfront investment, but it also decreases the expenses from your cash flow offering better financial flexibility.
If you’re finding it difficult to decide about buying a commercial property and leasing it. Here are some of the things you might consider.
According to Steve, leasing property and using it as a constant source of income to fund your business is a common strategy these days. Commercial properties like these generate effective returns from the tenants.
Tax deductions offer an option to the businessmen that reduce their overall expenses each month. The government allows business running under leased properties special deductions on their taxes.
Lower Occupancy Costs:
There may be cases where purchasing a property is cheaper than leasing. However, many tenants find it easier to deal with their expenses on a monthly basis and aren’t willing to pay a huge amount at once.
Leasing is made even cheaper after deducting taxes because 100% of all the payments your company makes come with low tax rates.
Cleaner Balance Sheets:
Leases in the commercial real estate market are always kept off the books and don’t appear on balance sheets. The company shows an expense regarding the lease, but it doesn’t affect your rounded off statistics.
For instance, when you purchase a property yourself and make a one-time payment, you’ve increased both assets and liabilities. That also if you have a mortgage.
Moreover, the property loses its value as time goes by and you’re left with a depreciated asset at the end.
When you purchase a building for your business and use it for all your company’s operations for a while. It’s very difficult for the whole system to migrate to another place once you decide to make a move for one reason or the other.
Such buildings can only be sold at good prices if they’re in a very good locality, still offering minimal profits.
Many new owners might also be able to purchase your commercial property at a lower price because of the urgency your company has.