Pros and Cons of Leasing and Renting

Published by SD Desk on

time for startup

With several business owners looking for warehouses to purchase, rent, or lease, the common dilemma faced by them is to choose one out of these three options. Renting and leasing are common options because of the variety of advantages it offers over buying. The even bigger problem is choosing the best warehouse for your business. Since buying a warehouse is a more limited option, rental is more available in comparison.

One of the simple but main differences between renting and leasing is the time frame. Leasing a place refers to renting it for a long time period perhaps a year or two, in comparison to renting which is a monthly affair. But if it were that simple, there wouldn’t be types now would there? So, to help you make your decision easier, the list of pros and cons of both renting and leasing is listed below.

Pros and Cons of Leasing  

Advantages

Stability

The idea of being settled in one place for a while gives a sense of security. You can freely operate your business from one place without having to worry too much about rental rates, fluctuating rates, mortgage repayments. You can carefully layout your financial plan with time in hand.

Tax Advantages

As your downpayment has been made, you will see your taxable incomes reduced as you will generally reduce all costs related to leasing!

Available Capital

Since your down payment is made, you are free to use that money elsewhere to invest in your business however you wish!

More Time

No worrying about rent hikes, or price hikes! You own the place! At least for a long time! Sit back and relax without the fear of losing the place! 

Long time to relocate!

If by any chance you wish to relocate or move out from the current space, you have plenty of time in hand to make your decisions wisely!

Disadvantages 

Costs Pile Up!

I hope you saved enough to pay for your lease renewal because when your time is up, so is your previous budget. The lease will increase once you wish to renew with added costs.

Only One Boss!

The Landlord has the final say, whether on the layout change or your relocation. You name it. You need his/her permission to make any renovations. 

Also, in a very unlikely situation, your landlord can refuse to renew your lease. At the last minute, you will be forced to relocate and you might end up in an uncomfortable location that doesn’t suit your products and operations. 

Bye-Bye Capital Benefits!

You can say farewell to capital benefits because the government does not offer subsidies to lessees and even if it does, it will be in a small amount.

Growth On Limited Space!

If by good luck, your business flourishes before your estimated time, where will you store your goods? You won’t be allowed to expand the leased space. You might have to look to rent another warehouse. That’s another added cost.

Rates Go Up & Down

Fluctuating rates will cause a great disadvantage to your leased warehouse as it can affect your budget and make it difficult for you to plan your future costs and your future business growth.

Pros and Cons of Renting

Advantages

Cost-Effective!

Renting on a monthly basis, or a short time period will save you money than paying a huge load of down payment. You can save money and decide how you would like to spend it.

No Maintenance Duty!

If you’re renting, your maintenance charge and repairing charges will be taken care of by the landlord. For this, you can invest more time in your business to improve productivity. Also, think of all the money being saved because it’s not coming out of your pockets!

No Major Commitment!

You have the freedom to choose a separate location or a different sized warehouse that fulfills your business needs.! Just pack up within your time and depart respectfully!

Einie, Mini, Minie, Mo?

You have a great variety of warehouses to choose from as rentals are available! You can choose from a great range of options depending on your preferred location, size, and other important amenities. 

It is also flexible in the sense that if you rent warehouses, you can operate your businesses from different locations since you won’t have to pay the sizeable deposit, maintenance, and upkeep costs for each new location.

Some Time to Relax!

Your landlord or property management company will be taking care of the general building maintenances. Use that free time to travel or come up with innovative ideas to invest in your business!

Disadvantages 

Increased Operational Costs!

Renting may have its perks, but in the long run, you will notice your operational costs skyrocketing!

Safety!

You may have to spend an additional amount on security because you have no control over the space. And for your peace of mind, good security can guard your business. And a good security team requires a good amount of money.

May I?

If you need to make changes to the interior, storage design, or exterior, you must get permission from the landlord. This can hamper your storage system if it does not complement the existing storage space designed for you.

No Tax Benefits!

Along with rent, you get no discount on your taxes. That’s an added cost. 

Not here, Nor There!

If warehouse estate value increases, your landlord might hand you that “pack your things and leave” notice before you may have even gotten comfortable. Once again, the no control over the property factor really matters.

Now that I have made your choice a little simpler, I hope you can take the time to go and make the right decision for your business. With both sides creating a heavy debate, it really is up to you to make the correct choice. You can thank me later. Good luck!


SD Desk

SD Desk aims to create, guide, and motivate young, and energetic people for entrepreneurship worldwide.