Should I Buy or Lease an Office Building?

So, I get this question a lot: Should I buy or lease? I have often told people when they’re starting out, it’s kinda funny. Someone will hear me speak somewhere or they’ll read a quote of mine in some media publication somewhere and they’re so excited and they want to immediately buy their commercial property and yet, they’re only at the beginning of their business–maybe they’re six months into their business, whatever it is. And I’ll often tell them, sadly, it’s turning away business for me of course, but I’ll tell them it doesn’t make sense. I’m a big believer that they have to use their precious capital to prove their concept first, and that often takes about three to four years. But what often happens is, once they’ve done that successfully, at about that three- or four-year point, they’re going to have the same experience that most of our clients have had–even I’ve had in my past, which is, you have that 4 a.m. wake up light bulb moment. You’ve got the rent check later that day, and you go, “Should I continue to lease my property when I could otherwise own it, much like why I moved out of my apartment into a house?” And it’s a very common phenomenon that happens to a lot of business owners of small- to mid-sized companies, and I just think it’s really critical they get to the point where they have established themselves in their marketplace–that they’ve gotten to a place where they’re a fairly healthy company and then absolutely. It’s a no-brainer to stop making their landlord wealthy and actually buy commercial property–something that they will appreciate over time that they can start building up equity. They’ll probably pay the same monthly lease payment but they’re making it to themselves now, as opposed to their landlord. It makes a profound impact on the balance sheet of that business owner.

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