Houston General Construction vs. Commercial Leasing

three people looking at plans for Houston general construction project

Every successful business will face a dilemma sooner or later: Should you lease or own the building? There is no right answer for every situation, so it’s important to weigh your options carefully. However, in many cases, buying property and choosing Houston general construction for your new building offers some notable benefits. 

Choosing Between Houston General Construction or Leasing

When it comes time to choose between building your own building or continuing to lease space for your business, there are a lot of factors to consider. 

Cost

three people looking at plans for Houston general construction project
Houston general construction can help you take advantage of the benefits of owning your company’s building.

One of the first things to look at is cost. In some cases, it’s more cost-effective to lease. However, in most cases it’s going to cost less to own your building. One survey found that leasing costs about 86% more than owning over a 15 year period. So, in many cases Houston general construction for your commercial building will save a significant amount of money for your business in the long-term. This is because monthly mortgage payments tend to be less than rent. Also, you’re not at the mercy of a landlord who raises the rent rate every year.

Another important thing to note is, if you’re a small business, the Small Business Association (SBA) offers low cost financing to help with buying land and constructing a new building. So, if you qualify, commercial construction might be incredibly cost-effective. 

However, there are some situations where it may not make sense to build your own building. For instance, if you plan on staying fewer than 7 years, research suggests that it might be more expensive to own than lease. 

Also, generally you want to have not only a down payment, but six months of reserves for your mortgage payment if you’re buying a commercial property. So, if you’re just starting out or your cash flow doesn’t meet these requirements, it might make sense to hold off on construction for now. 

Rental Income

Generally, businesses that aren’t in the real estate and property management game occupy at least 51% of the space. This is because many loans for this type of situation require your business to use most of the space. However, if you have extra room, you can lease it out to other businesses and bring in rental income. 

This is a common situation. For instance, your Houston commercial construction contractor typically recommends building a space that will fit not just your current needs, but your future needs as well. If you’re a growing business, you might need more space in a few years and you don’t want to outgrow your new building that quickly. However, in the meantime, you can use that extra space for income. Leasing to other businesses can give you extra income.

Equity

Another great benefit of building a commercial space is you can build equity. Lease payments just line your landlord’s pockets. Payments on your mortgage and construction loans help your business build equity. This gets listed on your balance sheet and adds to the value of your company overall. 

Leasing doesn’t allow you to do this, so the money you pay toward your business space doesn’t come back to you through equity. This is another reason why many businesses choose to construct their own building rather than lease space from someone else.

Tax Benefits

There are also several tax benefits to owning your own building. What many business owners do is purchase the land and build the building under an LLC separate from the business. The LLC can deduct interest from the loans as well as any depreciation of the building and enjoys the tax advantages of being an LLC. Then, the business will pay rent to the LLC that owns the property. The business can often deduct rent payments on taxes as well.

So, in many cases, if you purchase commercial property and construct a building, you might notice some great advantages on your company’s taxes.

Control

If you’re leasing space for your business, you probably know there are things you can and can’t do to the space. For instance, some improvements might get vetoed by the landlord. Also, when you have a problem, you often have to wait for the landlord and maintenance technicians to resolve it.

When you choose to build your own building, you’re in control of your space. If you need to put up another wall to improve workflow, you can do so. When you need maintenance, you don’t have to wait on anyone else. Having control over your own space allows you the freedom to do whatever you need to do to the building to make your business efficient and productive. 

Customize Your Building with Houston General Construction

Choosing Houston general construction for your company’s building is a great way to get a completely customized space for your business. The right space and floor plan can boost efficiency for your operations. 

Design build construction is a great option for building a commercial space for your company. Not only is design build more cost-effective, it’s also more convenient! You sit down with the construction team to talk about your company’s needs and we get to work designing the perfect space for you. Once design is finalized, we start work on construction. This saves time, money, and hassle compared to the design-bid-build process. 

What’s more, we even provide start to finish Houston construction management for your project. The construction manager’s job is to streamline the project and monitor things like budget, deadlines, and safety.

Essentially, you get every service you need for your construction project in one team with one point of contact for ease and convenience. 

Trusted Houston Commercial Construction Contractor

Get the advantage of experience from your Houston commercial construction contractor. We’re a premier contractor with turnkey solutions for all types of commercial projects. Whether you need an office building or a warehouse, our specialists have the skills and knowledge to make it happen. Call us now at (713) 856-9977 for a bid!