Business Premises: Buy Or Rent?

As in the housing market, the question “Buy or rent?” in commercial real estate evokes almost Shakespearean passions. The supporters of the lease have one argument. For those who are set to buy, it is different. Let’s try to figure out whose arguments are more substantial.

In our article, we will use the data for Denmark, since this country is one of the most promising for starting a business and developing it in Europe. Statistically, the Danish economy is growing.

Over the past 10 years, GDP growth has averaged 2-2.5% per year, which is based on small and medium-sized businesses. That is why in this country there are opportunities for opening and developing your own business.

Also, renting premises in Denmark is the simplest process, and the risks in which are minimal. In the modern world, such procedures can be solved remotely, via the Internet and you can find a room in Kontorhotel here.

Using the Lokalebasen website, you can choose a city, location, or even a country. Also, thanks to the filters, you can choose the availability of parking and other nice options that would suit your business.

IMAGE: UNSPLASH

Renting

“By renting a room, you overpay and just give your money to a stranger!” say supporters of real estate acquisition. However, when buying premises on credit, the borrowed funds with interest will still have to be given to a foreign bank, so the difference is small. Unless, of course, the business owner buys the premises not with his own money.

Changing The Terms Of The Lease

The conditional disadvantages of rent include a certain dependence on the mood of the owner of the premises. Although this dependence, as a rule, is much lower than in the housing market and is regulated by the lease agreement.

In the case when the document is drawn up correctly, the fixed amount of the payment, the term of its payment, and the term of the contract itself are prescribed, as the conditions for a possible increase in the rate, the conditions for termination, penalties are indicated, the stay in

Free Money

Lease advantages – release of money for business development and high mobility.

In the case when the business is tied to a specific location, more precisely, to the flow of potential customers, it is better to rent a room. If this flow has decreased for some reason, you can change the location and thus improve things.

For beginners in business, it is better to rent a room for a start, since investments and risks, in this case, are much lower. This will free up funds for development, and make your company more mobile.

With successful development, you can consider the option of acquiring property in the property. So with the help of Lokalebasen you can transfer from one city to a business in another, for example, by premises for rent in Aalborg.

Buying A Property

Legislative Restrictions

Often in many European countries, foreign companies cannot buy real estate for their business at the legislative level. Also, small firms opened by foreign citizens will also not be able to acquire a place for their business.

For example, it is difficult for foreigners to buy an apartment or a house in Denmark. The sale of housing to non-residents is prohibited in cities and coastal areas. The exception is:

Foreigners who have previously lived in Denmark for at least five years;.
Eu citizens who work in Denmark;.
Citizens of countries outside the european union, if they have a residence or work permit.

In this case, many turn to the Lokalebasen service for renting premises, where you can rent a place for your business even in Kontorhotel, which is one of the most prestigious places in any city in Denmark.

Spending Extra Money

The most important argument against the acquisition of commercial premises is a significant amount of free funds. Of course, you can take a bank loan, but not more than 70% of the value of the object.

You also need to understand that additional funds will be required for the repair of the premises and its modernization. And in general, all the worries about maintaining the premises in proper condition, taxes, and utility bills growing every year are now only yours.

Restriction In Actions

The purchase is advisable if you have an already promoted business, and you are buying out profitable premises that you are currently renting. But at the same time, there is always a risk that a stronger competitor will open nearby, and the business will decline.

In this case, selling the unwanted premises is more difficult than terminating the lease.

General Trends

In general, buying and renting real estate are important aspects for businesses in any industry. Statistics show that different business sectors are dominated by different approaches to buying and renting real estate.

For example, in the retail industry, leasing is more popular as it allows businesses to quickly scale up and test new locations.

On the other hand, in the manufacturing and construction industry, the purchase of real estate is preferable, as this allows for more accurate planning of infrastructure and management of production costs.

Disclaimer: The above references an opinion of the author and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice. Invest responsibly and never invest more than you can afford to lose.