Buying a business is a different ball game from buying a property with a business. Thus, if there’s the option of buying a property with the business, it is important for proper considerations to be made. This article highlights some pertinent issues that should be addressed before getting a property.
A lot of small and medium-sized businesses stick with leasing the properties in which they are based. Such properties are usually leased for periods that range from a year to two years, and plans for the extension of the lease are also made. The lease option is always considered because of reasons such as its cost-effectiveness. The pros and cons of buying commercial property while buying a business are stated below.
Pros of buying a property with the business
The physical location of a business may determine how well the business may perform, and that is the major reason why business owners buy commercial property as they buy the business. If it has been ascertained that the location of a business is strategic to client retention and optimum performance, the property can be bought with the business because the financial implications of this move will be covered by the turnover of the business. It is thus especially important to confirm that the location will significantly improve the turnover of the business before buying the property.
Other peculiar situations also make buying commercial property with a business pro. Such situations include if there’s a need to control the tenants that utilize other parts of the property. Sharing a property with certain kinds of tenants could deter customers from patronizing the business and alter the image which the business plans to project. If there isn’t a way to control the type of tenants that could occupy other parts of the business in the lease agreement, buying a commercial property with the business is a pro. In situations where the business needs to alter the space in such a way that the landlord may be uncomfortable with to project the brand identity, buying the property to attain total makeover freedom is a pro. With the freedom to protect the identity of the brand, the turnover is bound to improve to balance the financial implications of getting the property.
Buying a commercial property with a business also means an extra source of income from the rents gotten from other tenants of the property.
Cons of buying a property with the business
The major con of buying a commercial property with a business is the extra financial commitment that comes with the move. A lot of business owners prefer to run businesses in the most convenient way without extra commitments, especially financial commitments. Buying a commercial property with a business also seems like investing the property as well as the real estate market, a move which requires extra planning. If the property is a good investment, it could lead to extra financial gains. Otherwise, it is an extra burden.
Becoming a landlord also comes with other responsibilities such as effecting repairs when necessary, and these extra responsible could be cons of making the decision.
Overall, the decision of buying commercial property with a business should be made after weighing the pros and cons peculiar to the business.