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Should You Rent or Buy a Location for Your Business?

Starting a new business comes with several important choices and risks for owners, but few are as important as the business location. Once owners find a great part of town to open up a retail store, restaurant, or office, then they have to decide if they should rent a commercial space, or buy one outright.

In today's Aegis blog post, we'll compare buying versus renting a commercial location, and the impact that decision can have on finances and business insurance coverage.

Renting a Commercial Property

For most business owners, renting a commercial site is the ideal choice because it offers several key benefits. It can take far less time to get the business off the ground compared to those building from the ground up.

Some of the benefits of renting a commercial property include:

  • Ability to rent a fully constructed business with minimal changes needed
  • Lower financial risk for business owners
  • Choosing an established location with built-in customer traffic already
  • Not being responsible for landscape maintenance or building repairs
  • Less capital needed to rent compared to buying a property

For these reasons, businesses may prefer to rent a commercial site so they can focus solely on business growth without the complications of property ownership.

Buying a Commercial Site

Some business owners want more freedom in how they operate their business and more flexibility regarding the look and design of their property. For these reasons, owners may choose to buy land and construct a new building, or purchase an existing building to house their new company.

The advantages to owning a commercial site include:

  • Building up equity in their property instead of simply paying rent to a landlord
  • Setting their own hours of operation with more freedom in how they run their business
  • Not dealing with competition or issues with neighboring businesses
  • Expanding or renovating as needed (such as patios or parking lots)
  • The ability to rent out the property if your business outgrows its original location

Financial and Insurance Implications

Companies that opt to rent a commercial site can do so without the major investment of buying a property. Renters may have to pay a couple of months' worth of rent in advance, but owners must make a greater financial investment for the mortgage and any building construction needed.

In addition, businesses that choose to rent a site are typically required to carry specific types of commercial insurance coverage, such as General Liability and Commercial Property Insurance. Businesses that choose to own a commercial property need coverage for their entire plot of land, as well as the business structure, business assets, and liability coverage.

How Aegis Can Help

The Commercial Insurance specialists of Aegis Insurance & Financial Services can help your company with all your business coverage needs, whether your business is ready to rent a site or buy a property and begin construction. We can assist with lease requirements regarding insurance coverage, and also advise on the impact of location and building construction to the cost of insurance so there are no shocks.

Our team can create a customized Business Insurance portfolio that meets your specific business goals and industry needs, with top-quality, affordable coverage. Contact Aegis today at 713-850-7622 for more information about our full range of Commercial Insurance policies, or request a free quote online.


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