pretty large chunk of your profits.
CONS OF OWNING COMMERCIAL PROPERTY
These drawbacks have to do with the lack of flexibility and the fact that you now have a liquid investment.
Upfront Costs
When you lease, your costs are usually 6 to 10 times less for your first set of payments than when you put down money to buy a property. A lot of companies aren’t in a position to do this. Most companies purchase a loan that may require that amount or more for a down payment. There are other costs involved, such as closing costs and due diligence costs. This can be one of the main reasons companies lease since they just don’t have these funds.
Lack of Flexibility
First off, leases are anywhere from 3 to 6 years whereas mortgages can be 15 to 20 years. Your finances are tied up for a long period of time when you buy, which could limit using it in other places. Potential expansion is also limited if space is running low in your office. It’s very hard to predict the short-term future much less the long-term future of a company. You may buy a building with 12 current employees and space for 15 or so. But in 5 years you may have 25 employees and be forced to go through a long selling process. Downsizing is also limited here. A company with 15 employees may move into space for 15 to 20 people. After a down year, the company may be forced to downsize to fewer than 8 employees. Now you own and are paying for extra space you aren’t using. You can rent out the empty space or move. Each of these options
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