Buying vs. Leasing

As the industry matures, so do the questions. One of the hot topics of today is, “Should I buy my building or lease it?”

Affiliates like CrossFit Fury are answering this question and planning for the future. But what does that answer look like for you?

According to FitSmallBusiness.com’s analysis, the answer depends on how long you are in the space: “We found buying commercial real estate is a better option than leasing if you plan to stay in the same location for seven or more years. If you plan to stay in a single location for less than seven years, then leasing might be a better option,” they shared.

In their analysis, seven years was the breakeven point. As it stands, buying and leasing each has its own benefits. So, what should you do?

While we can’t decide for you, we can provide you with some pros and cons of each. Read below and step away with better clarity on the answer to this question as it applies to your Affiliate:

Benefits of Buying

  • You can build equity.
  • If property value increases, you can benefit.
  • You can have renters in your space.
  • Tax benefits.
  • You’ve got control of your property, meaning your rent doesn’t increase and you can do what you want to your building.

Negatives of Buying

  • There’s a large upfront cost. You’ll probably have to get financing and that might be hard to come by.
  • If you have renters, you’ll have to act as the landlord.
  • Your property value could decrease, meaning you lose money.
  • Way less flexibility.
  • You can’t just call the landlord to come fix things; you’re responsible for that now.

Benefits of Leasing  

  • Less upfront cost. Your cash isn’t tied up as much.
  • Tax benefits.
  • More flexibility for moving or expanding.
  • You don’t have to manage the property or any tenants.

Negatives of Leasing

  • You’re not investing in anything you’ll see a return from.
  • Paying rent.
  • No control over your rent price or the building; if the owner decides to sell it, you might be kicked out.
  • No passive income from tenants.

So, the question becomes what do you want to do with your gym? Is flexibility important for your business right now? Or are you OK to lay down some roots, focusing on passive income? Every Affiliate is different, so take some time and consider what this means for your gym.

EXAMPLE: Stuart Brauer of Urban MVMNT bought his own space in 2017. He shares the reasons why and what he’s doing with it here.

Heather is the editor for Box Pro Magazine. Contact her at heather@peakemedia.com.

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