Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
If you’re a small business owner who has outgrown your spare bedroom or garage, or if you’re looking to expand to a new location, you might want to consider whether to buy or rent your next commercial space.
Leasing Commercial Property
Let’s start with making the decision to lease a commercial space. In some cases, you might not have a choice at all. If you’re just starting your small business, you might not have the resources to buy and funding can be difficult to come by as a fledging enterprise.
But leasing isn’t necessarily a bad thing. Some of the advantages of leasing your business location include:
On the flip side, though, you might not be able to customize the property to fit your business needs. Additionally, there is a chance that you will be forced to relocate when the lease is up. If the owner of the property finds a tenant who is willing to pay more, your lease might not be renewed.
Many business owners choose to lease until they really get their businesses going. Buying commercial real estate too early in the game – especially if your business finances are highly leveraged – can lead to financial difficulties for you and your business if something goes wrong. Buying commercial real estate makes more sense after establishing a successful track record for your business.
Buying Commercial Property
Commercial real estate expert Chris Hurn agrees that buying commercial property to house your own business can be a savvy move. In his 2012 book The Entrepreneur’s Secret to Creating Wealth: How the Smartest Business Owners Build Their Fortunes, Hurn points out that one of the best way to grow your wealth as a business owner is to buy commercial property. You don’t have to worry about being forced to move. It’s possible for you to alter the real estate to fit your specs, and you don’t have to worry about the rent going up.
Another advantage of buying commercial property to house your business is the possibility of selling the property later at a profit. Or if you decide to keep it, you may be able to lease it out to other businesses. Indeed, if you don’t need the entire property for your business, you can get other businesses to move in – and help you pay the mortgage, taxes and insurance, as well as contribute to upkeep and maintenance costs.
Later, when you retire, Hurn says in the book, you can simply lease out the entire property, and use the income to help support your desired lifestyle.
One of the main downsides to buying commercial property is the fact that you are wholly responsible for the property. You either have to hire someone to manage it for you, or you have to take time away from building your business to manage it. The other downside is that real estate taxes and insurance, while usually deductible, tend to rise over the years and often make the property more expensive to own.
Still, there are enormous tax advantages to owning commercial real estate. Depending on how you set up the ownership of the property itself, you may be able to make a significant dent in the amount of federal income tax you pay personally. And, you may be able to leave a significant tax-managed asset for your heirs.
If you decide that buying commercial property for your business is the way to go, Hurn’s book recommends the SBA 504 loan. This loan program offered by the Small Business Administration is expressly designed to help small business owners with large capital expenditures for property.
There are pros and cons to both leasing and buying commercial property. You need to weigh your options, and decide what is likely to work best for your business at this time. Before making any moves, consult with a business attorney, an accounting professional and a real estate attorney to understand whether buying or leasing real estate is the better move and how it will affect your business’ bottom line, and your own.
Miranda Marquit is a freelance writer and professional blogger specializing in personal finance, family finance and business topics. She writes for several online and offline publications. Miranda is the co-author of Community 101: How to Grow an Online Community, and the writer behind PlantingMoneySeeds.com.
The information contained in this blog post is designed to generally educate and inform visitors to the Equifax Finance Blog. The blog posts do not give, and should not be assumed to provide, personalized tax, investment, real estate, legal, retirement, credit, personal financial, or other professional advice. Before making any financial decision, you should always consult with the appropriate professionals who can explain your options, rights, and legal responsibilities, and advise you on any tax, legal, credit, or business implications that may result from those decisions. The views and opinions expressed by the authors of blog posts are their own views and may not be the views or opinions of Equifax, Inc. and/or its affiliates.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.