The advantages of purchasing a commercial shop include

• No worry over incremental rent increases
• Interest payments are tax deductable
• The option to sublet large properties as added income or to help with mortgage payments

• You can design the property to sit your business needs

The disadvantages include

• Large lump sum deposits of between 20% – 30% of the property value up front
• You will be responsible for maintenance and upkeep costs
• Mortgage payments could increase

The advantages of renting a commercial shop

• The landlord is responsible for maintenance and upkeep of the premises

• You are not responsible for property taxes

Disadvantages of renting a commercial shop

• Depending on your landlord, you may not have the option to make changes to the property at will
• Long lease agreements usually accompany commercial rentals

Choosing Commercial shops or premises

Consider the business you run and decide:

1. How much room you will need for employees – How many private offices will you need, lunch areas, number of rest rooms
2. The needs of customers – Will you need parking space for visitors or customers?
3. The need for additional space – Will you be maintaining an inventory for supplies in the shop and need additional space, or require meeting rooms?

Location

Consider the following when choosing the location for your business:

• Distance from suppliers if you are a retailer. The closer you are to your suppliers the lower your costs will be.

• If you deal with communication, locations that are away from busy city centers will be more affordable to rent or develop
• Consider whether the location is easily accessible by staff and customers. Areas in busy city centers will cost more but you will have a larger customer base and easily be able to staff your business.

Financing the purchase of a commercial shop

If you don’t have a large sum of spare cash available, you will need a commercial mortgage to finance the purchase of your shop. The minimum length for a commercial mortgage is approximately 15 years and your property will be at risk if you are unable to keep up mortgage payments.

Setting up your shop

When you are budgeting for your purchase, remember that you will need to include:

• Decorating costs
• Moving costs
• Office furniture and equipment
• Ordering stationery and other supplies

The overall cost of buying a commercial premises is higher than the cost of renting for the first five years, equal for the following five years and cheaper after. It is a long term investment that will be an asset in the overall lifespan of you business.