One of the most taxing parts of planning one's business is the option to buy or lease the building the business will be located in. Seems like it would be a fairly straightforward choice—buying is better right? Not always. Let's take a look at why.
When our business plan writers are giving advice to clients regarding whether they should buy or lease a building, the biggest factor is how much money the client has to put down on the property. Generally, the SBA won't collateralize loans for more than 80%. This means that if the client intends to, say, buy a building for $1,000,000, plus another $400,000 in operating cash, they need to have about $340,000 to put down. However, if the client is open to leasing the space, they can then get into the business for 20% of the total raise, or in this case maybe $500,000 or $100,000 out of their pocket.
While we have been trained that buying is better than renting in residential property, good business plan writers also need to consider the business plan to buy a building and see if it's feasible. Commercial buildings generally have much higher monthly costs than do lease spaces. All the little nuances of maintenance fall on the business owner and distract him or her from running the primary business that occupies the building.
Last, a business plan to buy a building written by professional business plan writers needs to deal with depreciation. While the building is an asset that we know mentally appreciates, from a tax standpoint it can be depreciated as long term assets along with equipment, etc. Handling these many things in a business plan is what makes hiring a business plan writer a smart choice. Please contact us to speak with a business plan expert.