To rent or to buy the commercial premises
14 April 2009 - 18:42
One of the majors costs at the time of initiating a business, usually is the purchase or the rent of the premises for its operation.
The decision to buy or to rent the premises for a business depends on several factors, but definitively, the main factor is the capital or the financing available.
Before making this decision we must calculate which well will be the total investment of the business, or in the scene where the premises are bought, like in which it is only rented. Then, we must calculate the projection of the future income and debits, and, according to it, to analyze if we would be in the capacity to monthly pay the debt contracted as a result of the purchase of the premises, or itself we would be able to pay the rents.
The usual thing in the case of a single industralist, or a small business, is that buying the premises are far from its reach.
If we chose to ask for a loan for the purchase of the premises, unless we have a good line of credit, the usual thing is that the bank asks to us to at least put 25% of the required totality.
Nevertheless, the monthly payment of a rent usually is one of the majors costs in a business, reason why the ideal would be to buy the premises.
If we are able to obtain the financing adapted for it, we would have the advantage to own tangible assets which we could take as a long term investment, being able to sell at any time it, for example, in case the business does not work. In addition we would have the advantage to have a greater control on the premises, for example, to be able to do all the remodelings to him that we want.
If embargo, in case we are not in the capacity to secure the financing to buy the premises, the other alternative is to rent one, in that case only we would concentrate ourselves in securing the financing to remodelar it and to equip it.
Renting the premises allow to reduce the investment substantially us, and in case the business fails, also to reduce the losses. In other words, it allows us to diminish the investment and the risk.
Although the disadvantages to rent the premises as already we have mentioned, imply having to permanently pay constant and a high amount by the rent, besides the possibility of having to be responsible for all the period that lasts the renting contract, in the case that we decide to close the business before.
If, for example, the premises are rented by three years, and the business fails in first, we will have to pay of all ways the missing months, to be able to some third party to sublease the premises to him, or to persuade the owner so that it allows us to terminate the contract.
Although we can avoid it to this at the time of writing up the contract of premises renting, where we must try that the terms or clauses are favorable, not only for the owner of the premises, but also, for us.
Labels: Advice, Creation of businesses
Compártelo
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- The rent of the commercial premises
- To rent the premises in a commercial center
- Advice before signing a contract of premises renting
- Recommendations when choosing the location of the premises of a business
- Factors to consider when choosing the location of the premises of a business
