In some cases it could be more cost-effective for you to purchase a commercial property instead of leasing it. Buying commercial premises is a major financial investment, however, depending on your personal and financial circumstances, it could prove to be a viable option.

Carefully consider your options and ensure you obtain property, financial, legal, and business advice before making any commitments to buy commercial premises.

Advantages and disadvantages of buying commercial premises

Advantages

• Buying commercial premises will provide you with increased security and freedom for conducting your business.
• Real estate is a good investment during times of inflation or low interest rates.
• Mortgage repayments may not be much higher than rent payments for a lease.
• Any improvements to the premises add value to your investment.

Disadvantages

• Owning business premises generally ties up capital which may be better invested elsewhere in the business.
• You can not easily relocate your business if your business out-grows its premises, the market turns, or the area changes.
• If you are starting a business, the level of income a business generates can vary and you don't know just how successful you will be.
• Long-term loan repayments for premises can put pressure on small businesses.

Whether you choose to buy or lease commercial premises, you need to decide on the specific requirements that will meet your business needs and objectives, including location, size, availability of parking for clients and staff, fixtures and fit-out, access to premises after hours, right to use common areas to display signage and the right to affix signage. You will also need to consider prevailing political, government, economic and social conditions such as interest rates, the state of the economy, and demand for your products or services.

What's next...

• Step 1 : Consider your leasing needs
• Step 2: Inspect and research premises
• Read: BIZGuide: Commercial leases - main issues to consider