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RENT OR PURCHASE

 

Scenarios: Space of 1200 square feet for sale, the owner asks $195 per square foot for purchase. For rent, the owner asks $16 per square foot annual rent (gross) excluding electricity and heating costs. For the rental the $16 per square foot includes percentage of common areas, operations costs, management fees and real estate taxes:

 

Expenses

Lease monthly payments

Purchase monthly payments

Lease or mortgage loan 3%

1600 $

907 $

Electricity

200 $

200 $

Taxes real estate/municipal

0

330 $

Condo fees (if applicable)

0

500 $

Capital paid

0

-507 $

Total

1800 $

1430 $

 

 

RENT

Advantages :

• Allows you expand the space as the business is growing.

• Allows you to move to another smaller or bigger location more easily.

• Less risk if the business is starting.

 

Disadvantages:

• Rent money paid is lost.

• Leasehold improvements also lost.

 

PURCHASE

Advantages :

• Provides collateral for your business in the future.

• More control over lease increases (operational and management fees increases).

• Low interest rates.

• You keep your leasehold improvements that can increase the value of your building.

 

Disadvantages:

• Substantial down payment amount required.

• Costs of renovations of your leashold improvements.

• Could limit your expansion.

• Cost of maintenance of the building, management, insurance and unplanned repairs.

• You must anticipate staying for a long time in this location.

 

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