The three primary types of leases for
commercial and residential properties are the long-term lease, the
short-term lease and the lease-to-own variety. All three have their own,
unique benefits and drawbacks. Learning what they are will help you to
decide if a lease is right for you and if so, what type of lease you
should be looking for.
The Short-Term Lease
The short-term commercial lease is
generally for only a few years. The most common short-term commercial
leases run three to five years but can vary depending on the contract
that is negotiated. The short term lease is generally great for start-up
businesses who do not have a lot of working capital but expect to grow
quickly. The lease will allow the business to save a substantial amount
of money in the short term. In the long term, the money that is saved
can be reinvested in the business either in the form of real property or
for growth and expansion. Short term leases are also ideally suited for
companies that work on a limited contractual basis. Many companies are
formed that run for only a certain period of time. These are especially
prevalent among seasonal businesses, political campaign type businesses
and any other business interests that will not be in business as an
actual, licensed corporate entity for any length of time.
The Long-Term Lease
The long-term lease is generally going
to be for a long period of time and while it may seem better to go ahead
and purchase a property rather than lease, there can be many benefits
especially in regards to commercial properties and for certain types of
business interests. The long-term lease is ideal for businesses that
want to keep overhead as low as possible. It is also great for
businesses that are well established but that may require many different
offices around the country or around the globe.
Lease-To-Own
A lease-to-own contract allows the
person to lease a property for a given amount of time just like the
long-term and short term leases do. The primary difference is that a
portion of the money spent on the lease is generally set aside in lieu
of a down payment. Again, the specifics will vary depending on the
contract that is negotiated. In some rare cases, none of the money spent
on the lease will be granted towards a down-payment but this depends on
the contract negotiations and a good property agent should be able to
get you a decent contract on any type of lease.
Benefits of a Lease
Most of the benefits of and reasons for
getting a lease are financial in nature, though there certainly are
other benefits as well. Leases generally come with many different
options, and while the cost of a lease may be slightly more than that of
a mortgage, there are some great savings associated with leasing
property as well. One of the biggest savings comes in the form of
property management. Anybody who has ever owned a large building can
tell you all about the outrageously expensive upkeep and maintenance of
the building. For large, commercial buildings, upkeep can eat into a budget and turn an otherwise profitable business venture into a net loss for everyone involved.
Additionally, this allows the company
to save in the Human Resources department as well. When the costs of
hiring, vacations, pay-rates, taxes and other employee costs are figured
in, as well as the time it takes an accountant to do all of the
additional paperwork and the savings add up to a sizable amount in a
hurry. Not having to hire an entire maintenance and janitorial staff
alone can be a justifiable reason for many companies to consider leasing
commercial properties. Leases also generally allow the business to
re-negotiate a more "reasonable” rate for any extensions at the
successful conclusion of a lease should more time in the building be
necessary or wanted. Rather than having to shut down the entire office
or plant, an extension of an existing commercial lease will allow the
company to keep the doors open without any interruptions in business.
Whether or not a lease is right for you will ultimately depend on your
personal circumstances and what you need for your business. A
professional property agent should be able to sit down with you and look
at your needs and let you know exactly what is going to work best for
you and for your commercial business interests.
