Leasing vs Buying Medical Space
Is it better to lease or buy a medical space? That is certainly a great question! There are many options available and many different leasing arrangements that can be made. Each professional has different needs, and leasing or buying may be a better option depending on the circumstances. But how do you tell? Health Pro Realty Group, which connects professionals with DC medical office space, has shared the pros and cons of both to help you see which is a better fit.
Buying Provides a Fixed Cost
While it is normal to have a fixed amount while on a lease, that can be subject to change when the lease expires. When buying, you will have a fixed cost for the long term, which means it is easier to know what everything will cost every single month. It is not subject to change during the length of the mortgage. There will be a clear set amount that will need to be paid every single month with a mortgage and it does not change due to a lease ending.
The downside to this is that the amount will never go down. Once locked in, it will become an obligation that will need to be paid every single month, even if your income has dropped. A mortgage will be a set cost that does not change until the mortgage has been completely paid for.
A Lease Is Flexible
While a lease will have a set amount that will be paid every single month, it can be subject to change. At the end of the lease, new terms can be made or the space can be left, and another location can be selected elsewhere. By leasing a medical space, you are not locked in to one single amount and changes can be made to suit the overall business needs.
There Are Upfront Costs
While this may seem like something that is only done with mortgages, it is done with leasing a medical space also. It should be noted that money will be due right at the start. While a deposit can be required for a lease, it will be returned if everything was fulfilled during the lease agreement. However, with a mortgage the amount that is paid upfront is be something that can be reimbursed.
Mortgages for medical space can vary from business to business. There is more information in this YouTube video that can be of assistance and offer more tips and information on mortgage costs that are normally due upfront.
More Money Can Be Made with a Mortgage
Sometimes more money can be made if you opt to buy a medical space versus leasing a medical space. How is that possible? When a space is large enough, part of that medical space that is being bought can be leased out to another business. It may be enough to pay for the utilities or even the mortgage amount.
The downside to leasing out a portion of medical space that has been bought is that the owner will be responsible for any repairs and upkeep of the additional leased out space. Money that comes from the leasing should definitely be put aside to ensure that repairs can be made during the event of any mishaps or breakdowns.
Consider the Loss of Equity with a Lease
This is not the case with a mortgage. However, if under a lease there will be a loss of equity. It is important to note that if one is interested in obtaining equity, that it will be not be very feasible to commit to lease contract after lease contract. With a mortgage in the overall focus of things, there will be something that is owned in the end.
Lease Payments Are Tax Deductible
One great part of leasing a medical space is that there is no loan that needs to be fulfilled and it is fully tax deductible. Now, this does not mean that every single part of the lease payment will be able to be deducted, but a large portion can help when it comes to doing one’s taxes.
Interest Payments Can Be Deducted
While a lease payment for medical space can be deducted on one’s taxes, so can the interest amount on a mortgage. This is great information to know in the long run! With a lease there will be no collateral, but it can be tax deductible. With a mortgage for medical space, equity can be built and used as collateral over time, and the interest amount can also be tax deductible.
While each offer has a compelling argument, it can be difficult to say which is better, a lease or mortgage for medical space. Everyone will have to decide what works best for them and their business.