What are the advantages and disadvantages of leasing real estate?
Leasing real estate makes sense for many companies, particularly when they find themselves in growth or decline stages. During these times, leasing offers businesses the flexibility to grow and to contract without major financial consequences. Some other advantages of leasing include: • Monthly rent can be written off as a business expense. • Credit ratings don’t play as crucial a role in completing a deal. • Businesses can sublet or move at lease expiration with no risk of loss in property value from a poor market. Leasing also has disadvantages, such as: • Rental rates typically have annual increases. • There is no built-up equity or residual value at the end of the lease term. • Landlords can force tenants to move at the end of their lease terms. What are the pros and cons of owning? Many companies find owning facilities an attractive option, particularly when they sit in the mature stage of their life cycle. These businesses tend to have capital available for investment and typical
