Should I Buy or Lease?

Listen to Audio Programs on Lease Negotiations

The basic rule of thumb is that, if you can buy for the same monthly price as your rent, it makes sense to buy. 

Even if the mortgage payment is a little higher (less than 25 percent higher), the additional expense is offset by the tax advantages and wealth building that owning the building gives you. Even if you are leasing, it’s often a good idea to include an option to purchase the property. 

Personally, I am debt adverse so entering into a mortgage for my business would be very uncomfortable for me. I would probably try to save as much as I could so I could purchase a building in full and then run the business rent free. 

In the process of planning and starting up your school, few decisions will have as much impact on your prospects for success as choosing a good location and negotiating a favorable lease. Be careful not to get emotionally tied to any one location.

 Keep running the numbers to keep you focused on the potential upside and downside throughout the process. Stay cool, and most of all, don’t forget to just ask. 

If you end up selling your school, be sure you are not restricted from assigning that lease to the new owners at the same terms. 

Also, you may want to sub-let the space for certain classes during off hours. For instance, you may want to sub-let the space to a yoga instructor from 9 a.m. to 2 p.m., Monday to Friday, to offset your expenses and keep money flowing during down hours. 

Make sure your lease allows you to assign and sub-let the lease if needed. This usually requires landlord approval, but make sure your lease allows the possibility and specifies it will not be at a higher rate.