This is why you should buy rather than rent business premises
Beginning entrepreneurs often start in rental premises. Once the business gets more 'body', it is time for the next step, buying a commercial property. What are the advantages of buying and what disadvantages should you consider?
The success of your business depends on many factors. Good accommodation in a prime location can be a key advantage. The location should be perfectly accessible to your customers, but for a business premises of your own, the location is also important for a second reason. A commercial property in the right location ensures a stronger increase in value. A sought-after property will increase in value faster than one in a B location.
What are the advantages of buying a commercial property?
By buying a commercial property, you build up business assets. Through mortgage repayments and increases in value, you benefit from wealth accumulation. This while with a rental property, you do not build equity and also face periodic increases in rent. Financing a commercial property is cheap because of the very low mortgage rates. With your own premises, you are also not stuck with the restrictions landlords often impose on tenants. With your own premises, you decide how to furnish and decorate the premises. The monthly costs can also be much lower with a purchase property.
Owning your own business premises also has disadvantages
The advantages outweigh the disadvantages, but of course you also have to think about the disadvantages. Buying also takes a risk. Property prices have been rising sharply for years, but there can also be periods of declines. Over a longer term, property values generally rise, but temporary dips always occur. The value cannot just keep rising. For buying, you incur financing costs. That is also a disadvantage compared to renting. And with your own property, you are more tied to the location. A rental property, you can move out again when the lease term ends.
Opting for a mortgage with long-term security
Now is the ideal time for entrepreneurs to trade in a rental property for their own. This is because you can fix the mortgage rate for, say, 10 or 20 years at a low mortgage rate. So you can benefit from the current low mortgage rates for a long period of time. This way, you keep your monthly costs stable and low. You won't be able to do that with a rented commercial property.
There are more possibilities with a commercial property
With a commercial property, you also have another 'escape route'. Because of the acute shortage of housing, you can also convert the commercial property into flats, for example. Or turn it into a combined building, so partly for business and another part to rent out as living space. This way, you are nimble with your investment. You can also finance remodelling with a mortgage.
Want to know all about financing a commercial property? Our advisers can give you appropriate advice. You can request an appointment via our website.
