When starting a business, one of the first decisions that must be made is where will the business will be. Location, location, location is the mantra of many successful business owners. Where it is is where it’s at! And if it isn’t in a great location, your company isn’t anywhere at all.
Often, the decision isn’t so cut and dry. What if there is more than one awesome location? What if there is a great location but no building or a perfect building in a not-so-great place? Should you build or should you buy?
The decision will vary based on individual situations, but this analysis should help.
Pros and Cons of Buying
Buying an already existing building means you may be able to get working quicker. There will be no issues with commercial construction loan rates or loan value, which come into play when building your own establishment. An existing building can be much less trouble if it is in good condition.
If the building it is not already conducive to the type of business you want to start, that could be a big problem. A cost benefit decision must be made. Is it worth it to buy the building as is and make any necessary changes or would it be more cost effective to start from scratch? Determine if the location of the building is ideal or if there a better place on which you could build?
Pros and Cons of Building
Constructing a building can be an excellent option, but it is not without drawbacks. When you build, you can make it exactly the parameters you need. However, depending on the commercial construction loan structure, you incur debt long before you actually get to start generating revenue to pay the debt back. Further, the time taken to construct the building is precious lost operational time. You must weigh your options and determine if making a new building is worth the effort by considering both the construction and the opportunity costs.
Balancing the Scales
Finding the balance between building or buying, can be tricky. If there is an existing building that will do the job well and is in a good location, then buying will probably work best. However, if there is no suitable building on the market that is available from the get go, then constructing one may be the better option. Additionally, building is often the best bet if the firm will require a building with unique aspects that may not be easy to find in an existing structure.
Whether you choose to build or to buy, you will likely need to secure financing. Biz2Credit has expert case managers and a network of over 1,200 lenders to help you arrange the best commercial property financing deal. Visit Biz2Credit.com for more information and commercial property loans.