BBS can help you with all your real property and facility issues. BBS can help you find property to buy or lease and can help you manage existing real property, negotiate leases and arrange for janitorial services. Trust BBS to ensure that your facilities are appropriate for your business and will accommodate your future growth plans.
Once a business owner or individual determines his or her real property requirements and searches for and locates the right facility, then it is time for another crucial decision regarding the property – is it best too lease or purchase the property? Often the owner of the target property will consider either a sale or a rental of the property. But at other times the owner may be interested in only selling the property or only leasing the property. To help you make the right real property decision, you need analyze the economics of buying vs. leasing vs. buying as well as all related factors that determine whether leasing or buying a facility makes more sense. The primary advantage of leasing a facility is that your outlay of cash upfront to gain the use of the property is substantially less for leasing than purchasing the property. However, generally over the long term the primary advantage of purchasing is that you end up paying less than you would have paid if you leased the facility. Also, if you choose to purchase, you generally get certain depreciation tax benefits and any appreciation in the value of the property. To best understand the advantages and disadvantages of leasing vs. buying, it is best to do a detailed cash flow analysis which provides an estimate of cash requirements and potential returns for each alternative. To perform the cash flow analysis, you need to understand certain factors, including:
The purchase terms and conditions
The availability of financing and the terms and terms, including closing costs
The proposed lease terms
Your federal and state income tax rates
The property’s expected useful life to your business, for depreciation purposes
The property’s estimated value at the end of its useful life or when you sell it
Your overall cost of capital
All other costs that you would incur if you leased the facility but not if you purchased it, or vice versa
Long-range effects of the decision on your business.
If you want full control of the property. You can only get full control of the property is you choose to own it; otherwise you will always be limited on what changes you can make the facility.
You should always consider the long-term cost. A lease often requires less cash flow in the early years than a purchase. But over the long haul, a purchase is usually cheaper because a landlord will price the lease to make a profit for himself.
Sometimes the specific location is of primary importance and once you’ve established a winning business at a certain location, you don't want to move. Purchasing makes more sense because a landlord will like see the value of the location that you’ve created over time and increase the properties lease pricing to take advantage of your success.
If you are in an area of appreciating land values than purchasing can give you the upside of increase value over time.
A purchase may provide substantial tax savings through depreciation.
BBS can help you properly analyze all the factors important in making the right decision and help you get the right property in the right location. BBS can also help you with all the ongoing real property management issues that arise whether you lease of buy a property and can arrange the right janitorial services for your business to keep your business running smoothly.