Leasing or Owning Commercial Real Estate in Charleston
Many business owners wonder what the core differences are between leasing and owning commercial real estate in Charleston, and whether or not one is better than the other. After reading the below advantages and disadvantages of both, you’ll be able to weigh them all to see what best suits your needs.
- Cost: If you decide to own a building in Charleston, expenses include a down payment and monthly mortgage payments. Other expenses may include due-diligence fees and closing costs. Taxes and Insurance are also factors to consider when purchasing a building. Once you own the building, you may have an opportunity to collect rent on additional tenants. When leasing a building, expenses may include a lease deposit and monthly lease payments. Depending on your lease, these monthly payments may increase over term. Additional fees like Common Area Maintenance, Water and Electricity payments may also be incurred depending on how your lease is structured. Click here to learn more about lease terminology.
- Long term effects: When considering leasing or owning commercial real estate in Charleston, it’s wise to consider potential long term rewards and return on investment of the property. Owning a building has the benefit of any appreciation in the value of the property. The building may also be leased out to additional tenants and provide rental income to the owner. An advantage of leasing is deducting costs and spending, and having the flexibility to move locations at the end of your lease term.
- Responsibility: Owning a building in Charleston requires maintaining the property such as lawn and roof repairs. However, if you desire to make changes to the property, it would be easier as an owner since leasing would require permission from the Landlord.
There are pros and cons to leasing or owning commercial real estate in Charleston. There are factors such as costs, long-term investments, and responsibilities, all of which are vital to consider before deciding. Not sure if leasing or purchasing a building is best for your business? Contact Mike Ferrer, CCIM, MCR to discuss your specific needs and requirements in the Charleston market.