ABA Family Legal Guide

Forming and Operating a Small Business

Starting a Business

Commercial Leases

What are the advantages of renting space instead of buying?

One of your first decisions will be whether to own your space or rent it. A lot of start-up businesses won't have the capital to buy existing space or build their own new space, so that won't even be an option. If you're one of the lucky ones who does have that much capital, consider the changes you're anticipating for your business, such as future growth and other financial needs. Is buying or building better than leasing for your particular business? If the building is mortgaged, the term of the mortgage frequently will be longer than the lease term of a similar space, so you're making more of a commitment. You can try to have the best of both worlds by negotiating for a lease with an option to purchase or a right of first refusal if the owner decides to sell.