Lease vs. Mortgage for your Business

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Part of owning or managing a business involves deciding whether to lease or own your space. The answer may not always be clear.  When weighing the options, ask yourself the following questions:

  • "What do I know about operating commercial properties?" You are an expert in your own business, as you work with it everyday.  Are you an expert in real estate management as well? Real estate management may require different skills and resources than you already possess.  Make sure that owning and caring for your space will not impact your core business.
  • "Can I afford the true monthly payment?" A mortgage payment may be cheaper than your current rent payment, however, there are more costs to ownership than meets the eye.  Other things you will need to consider are property taxes, utilities, insurance, garbage and snow removal and landscaping and upkeep.  When doing a cost comparison between leasing and owning, be sure to include all of these expenses, along with unexpected repairs, to give yourself a more realistic representation of the cost.
  • "Can I afford the down payment?" A conventional mortgage on a commercial property usually requires a minimum of a 30 per cent down payment, as well as a deed transfer tax, legal fees, financing fees, appraisal fees and environmental and building condition reports. If your business will occupy more than 50 per cent of the building, you may qualify for a loan guaranteed by the provincial or federal governments and this can potentially lower the down payment to 10 per cent.
  • "How fast is my business growing?" A fast growing company may have rapidly changing business needs.  In five years, you may have more employees or require more storage space.  You may benefit from relocation as your business needs change, making leasing a great option.
  • "How specialized am I?" If your business requires unique upgrades or a specialized space, it may be costly to make these types of improvements to a space that you are leasing, especially if you do not necessarily plan to be there long term.  In this instance, a mortgage may be a better option.
The decision to buy or lease is a complex one.  When trying to make the decision between a lease vs. a mortgage, consider the return on your investment.  One last question to ask yourself is "Where is the best place for me to invest my money?" If you have questions, or are considering your options, the CUA Commercial Team would be pleased to meet with you.  Contact us at 902.492.6500 or

Revised Jul. 19, 2021

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