A Lease Before Buying?

Brent has outgrown his small business space and wants to upgrade. But is leasing better than buying right now?

QUESTION: Brent has no debt but the house, but he’s outgrown his small business space. He wants to lease and he wants to know if borrowing money is better than leasing.

ANSWER: I don’t believe in doing that. What you say is logical, but I go back to saying the borrower is slave to the lender. In counseling small businesses, in order to buy a building, you either need to be cash flush or very stable and have a predictable environment. When starting a business, I would never recommend buying.

We leased with an option to purchase about 5 years ago, and I was able to save money to buy the building. People tend to make decision based on the real estate and not the new business. Pay cash as you go.

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