Renting vs Buying a Commercial Property in the UK
Should you rent or buy your nursery building?
Transcript
Introduction
In this video we’ll be discussing whether you should rent or buy your building. Whether that be for a nursery or any other business you will learn some benefits of both to help you make the decision that is right for you.
A little background on myself I have successfully been running a nursery in London for over five years and continue to do so and I now teach and support people like yourself to open their own nursery via the course open your nursery in just six months without a massive budget the link for which can be found below.
If you are new here make sure you click that subscribe button and notification bell I upload regular videos to help support you on your journey and dream of opening your own nursery.
This topic ‘renting vs buying’ is part of a unit in the course which I just mentioned which goes through everything you need to do in order to open your own nursery. Here in this video you will learn some benefits and negatives of buying versus renting to help you decide which one is best for you and your situation.
Content
Costs
We will start with a cost involved in both. This is a complicated one as it is not as simple as comparing monthly mortgage payments versus expected rent.
This is because when getting a commercial premises the deposit required is usually very high at least 20% the value of the property and especially at the start of your business, you usually need as much cash as possible in order to make your business successful so spending, if it is a large amount of your money on a property, is not always the best thing though in the end if your nursery is successful you do get the asset at the end.
I go into more detail about this on the course and give support to those enrolled so you can be sure that you’re making the best decision when choosing your building but ultimately in terms of upfront costs renting would be cheaper you also need to consider upkeep and ongoing costs outside the mortgage and rent.
Most ongoing costs will usually be the same, though you’re likely to face greater costs in terms of things like property tax, higher insurances, repairs and maintenance if you own the property.
If you are renting you may also be responsible for some of these costs so make sure you check with your contract when securing your building. Though it is likely your ongoing cost will be less with renting so in terms of costs upfront costs and ongoing costs and general cash flow renting usually has the advantage.
Flexibility
Next, we’ll look at flexibility. This comes in two forms, buying the property gives you greater flexibility to make changes to the building subject to planning permission which you may not have if you are renting.
This gives the advantages to buying the property.
Though, renting gives you greater flexibility to leave and change location if the area you have chosen or the building you’ve chosen isn’t working out as you’re likely to have shorter notice periods.
Which gives the advantage to renting.
So, in terms of flexibility it really depends on what is more important to you.
Stability
As well as flexibility stability is also very important.
Buying offers this greater than renting you have the stability of being able to fix your repayments for certain periods, meaning you are not as susceptible to rent hikes as you may be if you were renting.
You also know that you own a building so you cannot be kicked out providing you keep up with mortgage repayments this gives the advantage to buying.
Other benefits for buying
Other benefits for buying include:
- benefiting from the increase in the value of the property, should it increase
- the ability of gaining extra income from renting other parts of the building
Other benefits of renting
Other benefits of renting is that:
- the process of moving is quicker and simpler
- you can negotiate rent free periods at the beginning of your lease
Conclusion
So, in conclusion if you’ve researched your area well and think the area of chosen will be successful which if you’ve taken the full course you should be confident that the area chosen has sufficient demand then I’d always recommend buying as it gives you greater security and provides you with an asset.
Though, if you’re just starting and don’t have the funds to do so then renting provides you with a quicker and cheaper way to get open and get started.
So, I hope this has helped you with your decision thank you for watching and for those that are stuck around to the end I’d like to give you a free exclusive checklist to help you choose your nursery building.
This checklist is usually only available to those enrolled on the full course you can download HERE just use code 111 to get access to it.
Also, don’t forget you can enrol on a starter guide for just £4.49 (use discount code youtube2) to get started on the path of opening your own nursery.
Again, I wish you all the best on your journey and dream of opening your own nursery you can get a lot more advice on my other videos and by subscribing so do click the links on the screen now I look forward to seeing you on the next video.
God bless.
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