When acquiring properties or equipment for your business, is it better to buy or to lease? Both options have their own fair share of pros and cons depending on the nature of your business, financial capacity, and your overall entrepreneurial goals.
To help you determine which one is much better option for you, here are a few factors that you need to consider:
TIME
Leasing can be a wiser, more cost-efficient option if you’re only thinking short term. However, if it’s for the long haul, you can purchase the facility. There is an option of a buyout as well, which allows you rent a facility temporarily and then purchase it should you wish to acquire it after the contract.
PURCHASING POWER
Another very important thing that you have to take into consideration is your purchasing power. This can help you determine if leasing can offer you more value for your money or if purchasing might be more ideal. If you think that the cost is reasonable and you actually have the means and the finances to acquire the property permanently, then buying might be better for you.
TECHNOLOGY
If your business requires or heavily relies on electronic devices and equipment that need constant updates and upgrades, you would get more bang for your buck if you just lease them. That way, you can just choose to terminate the lease agreement and sign a new one that suits your new required specifications.
With leasing, there’s not much risk involved. You don’t have to worry about depreciation and necessary maintenance. On the other hand, buying a property gives you the freedom to customize the place as you please. Not to mention that you have more security of using the place for as long as you like.
If you’re still apprehensive about the two, there is one option that gives you the best of both worlds—build-to-suit program. This is a wise choice as you will have the command to design and build a facility bespoke to your requirements without the large capital expenditure.