Before you come into a final conclusion whether to buy or lease a warehouse space, then you need to be aware that there are some fundamentals factors that will greatly influence your choice. Capital plays a big role in such a scenario so you must be stable financially so that you can make a better conclusion. Other factors include the expected profit from the firm and the alternative purpose for your financial resources.
For you to have a proper judgment between the two circumstances, then you will need to conduct an analysis of your organization’s cash flow. With this data, you will be able to get the outflows and the inflows within your anticipated holding period. You can then end up discounting your cash flow to the current value. Then it will be very simple to make a complete comparison between buying and renting a warehouse facility. Just to show this situation with an example, it can be very easy for a company to make the comparison between 10-year leasing and purchase of the same.
Now as mentioned above, the first of all factors that help a company decide whether to buy or lease a warehouse is the availability of the company’s capital. Most upcoming companies have not been able to purchase the warehouse facility because of down payments and some of the common cost paid at the end of closing. Having a clear picture of the company’s financial status will help them to make the right decision. This is because they will not have to spend all the companies’ savings in purchasing a warehouse when they could have leased it and save some extra resources for the investments.
Another factor that affects the decision of leasing or buying a warehouse an evaluation of the companies options for the use of their capital. This can be determined by the actual business of the organization and the amount of capital required for the complete operation of the firm. If a company can make a 30% return for every dollar they spend on the manufacturing of its items, then by spending some of this amount on mortar and bricks won’t be a big deal.
The final way in which one can decide on whether to buy or lease a warehouse is to evaluate the company’s expected growth. This is mainly because the cost involved in buying the warehouse are always upfront. If you may have a limited duration to enable you to pay for the cost of the relocation of the business items within the time span, then you should actually opt for leasing because the cost of buying will be too expensive to afford.
On the other hand, a company that is well established and very stable is likely to go for the purchase option as they may have no problem of timely relocations. If one has a business that may not be able to predict the company’s success in the next 3 years to come, then they need to opt for the leasing option.
If you’re looking for a warehouse to rent or buy in Miami, you should definitely take a look at Newmark Knight Frank’s website. Their team of industrial real experts are there to help you find the best properties for the best prices. You can find the latest news about their company and their case studies by clicking on the link.