Creating an idea for a business and executing it are two parts of the same whole, but they are also quite different. Setting up a company requires the procurement of a business space, and owners generally have the option to buy or rent. Understanding the benefits and drawbacks of both will help you decide what to do about obtaining a commercial property in Sri Lanka.
Long-Term vs. Short Term
When you’re deciding if you want to buy or rent a commercial property in Colombo, you should first think about how long you will need it. For example, if you are thinking of expanding a vast amount within the next couple of years, then renting is likely a more reasonable option. However, if you want to establish a long-term presence in a particular area, then buying the property may be the best step. Essentially, the longer you think you’ll be in a spot, the more seriously you should consider purchasing it.
Consider The Environment
Even if you do not have any plans to move your company in the near future, the environment might dictate that you do. For example, if you are planning to open up in an area that has recently seen an increase in crime, the town might continue to plummet in safety ratings in the next few years. You should also be aware of any competition in the area. They could force you out, or they could take at least some of your business away. If the space seems tenuous, think about renting so you are not stuck there.
Your Budget
With financial components in mind, the major difference between purchasing and renting is that you need to make a down payment with the former. To rent a property, you might have to make a security deposit or pay for the first and last month upfront. However, this sum is unlikely to be anywhere near that of a down payment for a commercial property in Kandy. Individuals and corporations that do not have the money for a down payment will have no other option but to rent. In the event that you are really interested in buying, find out if a rent with the option to buy plan is available.
Paying for Taxes
The budget for this endeavor is one of the largest factors you’ll have to consider when deciding which move is right for you. Renters generally do not need to pay taxes on the property; however, a stipulation may exist where you need to contribute. Still though, that is unlikely. On the other hand, when you own the property, you absolutely must pay the taxes on the property, so you’ll need to have enough money in the budget to do so.
Extra Bills
Not only do you need to account for taxes when you’re buying a property, but you also have to think about the other things that come along with property ownership. You will need to heat the place when it is cool and provide air conditioning when it is hot. You will also have to pay for electric and water. With a rental, you may have to pay for these factors as well, but they could be included in the overall rent. Make a list of all the financial obligations associated with both of these plans, and figure out which
The Agreement of The Lease
Deciding to purchase a property means that you do not need to answer to anyone else in regard to what you do with the space, aside from obtaining permits for extensions and such. For those who are thinking about renting, understand that someone else still owns the property. If, for example, you are told you have 30 days to vacate the premises and have nowhere to go, then your business could be in a tough position and could end up closing down as a result of this constricted time period.
The Size of the Space You Need
As you can tell, buying a commercial property as opposed to renting generally puts you on a stricter budget, but you can have the benefit of owning the property. Still, think about how large of a space you need to properly maintain the business. Since you would need to pay more for a bigger property, you might be better off renting if you need a lot of space. The rent will still be higher for a large space than a small space, but you can probably get a larger space for less than you would if you bought.
The Type of Business
Depending upon the type of business you are planning to conduct, buying might be more reasonable than renting. For example, let’s say that you have a mechanic shop that sees a lot of business. Working with cars is a messy job. If you are renting the space out, then you could end up accidentally ruining a floor with all of the grease from the vehicles and having to pay for the repair. Not that you want a purchased business space to be messy and unappealing to customers, but you have a little bit more leeway when you own the property.
Plans to Make Modifications
If you have any desire to change the layout of the building, then you definitely need to seriously consider purchasing it. With a rental, you do not have the power to make permanent modifications to the structure. Even when you own the building, you have to get permits, but those are yours to procure. In a rental building, you will need to speak with the owner to find out if the modifications or extensions are possibilities. The answer may very well be no, and then you are left to find another way to conduct your business or to search for a new rental.
Outdoor Space
For a number of reasons, you might be in-need of an outdoor space for your business. You may wish to set up seating outside for a restaurant or to conduct sales on the lawn when the weather is nice. It’s possible that you’ll have these opportunities with both an owned and a rented property, but it is more likely with the former. For those with rentals, you might share the space with another business or even a home, and you might not have the first right to the outside space.
Living at The Business
Some owners actually decide to live at their businesses. You might want to have a small apartment on top of the business, or you may wish to carve out a space in your house to conduct transactions. If you are planning to live at the same place that you work, then you need to choose a plan that makes sense for your own residential needs. If you eventually want to buy a larger house and move to a bigger business space, then renting is clearly the smart idea for you now.
When you are the owner of a business, you have a great deal of decisions to make about the future of your company. Whether you are moving from another location or opening up your doors for the first time, consider the benefits and drawbacks of both renting and buying.
