Leasing commercial real estate can make sense in several different scenarios, but a commercial lease always needs to be carefully examined. Signing the wrong commercial lease can be just as disastrous as buying the wrong property.
Hiring a South Florida commercial real estate lawyer to review your lease before you sign it is recommended in any situation, even when you are absolutely certain that a potential property is the right one. There can easily be details in the lease that end up being overlooked and costing you money in the future as a result of a wide range of potential liability or expense issues and disputes.
A few of the benefits and disadvantages of leasing are described below.
Leasing exposes you to fewer risks
One of the major advantages of leasing over buying is that it generally exposes you to lower risks, assuming that you negotiate a favorable lease. For example, you won’t be affected by downturns in the real estate market that can depreciate the value of your property.
You also won’t have to spend as much money upfront to move into your location, and your business will also have less debt on its balance sheet. Your business costs will also be more stable and clearly understood.
There can be disadvantages to leasing
When you lease a property you don’t gain any equity or benefit from appreciation in the property’s value. This may be a disadvantage if you plan on staying in one location over a long period of time. Your business may even be helping to increase the value of the building and the surrounding area but you won’t receive the maximum financial benefits of this unless you own your property.
You also won’t have any control over rental rate increases unless they are negotiated upfront in the lease, and you also won’t get to benefit from tax savings related to interest or depreciation, although your rent will be tax deductible.
Negotiate the best lease possible before you sign it
It’s ideal to have a South Florida commercial real estate lawyer available during lease negotiations so that you get the most favorable lease possible. This way you can minimize many of the potential disadvantages of leasing.
For example, your attorney may be able to negotiate an option to buy the property at the end of the lease and negotiate rental rate increases upfront. Your attorney may also be able to have the landlord pay for many of the maintenance expenses and other costs associated with the property.
Mark Schecter is an experienced commercial real estate lawyer who can help you negotiate your next commercial real estate lease or review your lease before you sign it. Contact Schecter Law today at (954) 779-7009 for advice on your particular situation or to schedule a consultation.