Often, most entrepreneurs and businessmen find themselves
baffled with an issue – whether to lease a commercial
space or buy it? However, the answer to this question varies
from case to case.
When you start to grow your business, capital is often
in short supply. This is one of the situations when taking
a decision to lease your commercial property becomes easy
and can be looked upon as the smartest move.
What is a Commercial Lease?
A commercial lease is a written document that contains
terms and conditions to be followed by the landlord and
the tenant/ Lessee. Also, it sets down the rent that is
the most vital part of the whole agreement.
A commercial property lease is a critical document. Therefore,
consult a lawyer in case of any doubts on any aspects
of the lease deed. It may cost a bit but will ensure prevention
of legal pitfalls that can be too dangerous if taken leniently.
The time and energy you would be spending in present would
avoid undue troubles in future.
Advantages of taking commercial property on lease
- Leasing Improves Your Cash Flow -
Anything that can encourage any business person to lease
commercial property is that it frees up cash. And, it
provides flexibility at the same time. Your money stays
in your business and that working capital keeps multiplying.
When the lease is up, you can easily shift to another
office location suiting to your business requirements
and budget in the best way.
- Less Responsibilities - Leasing commercial
property lessens the responsibilities for maintenance,
security, renovations, and other management issues for
a landlord.
- Less Tax Deduction - Income tax has
always been a headache for most entrepreneurs because
of completing a lot of paper work formalities. However,
leasing your office space can make filing the income
tax returns easier for you.
- Rent Working as Salary - Renting
your commercial property is certainly a much lucrative
option than to keep it idle. Simple rent every month
can work as a monthly salary for you - that without
much work. This is what generally encourages the landlord
to look out for a prospective tenant. However, the rent
may vary depending upon the location and area. Below
are the rates of some commercial property that can assist
you to extract the right money for your premises.
|
Retailers |
Minimum area required
|
| Super markets |
3000-5000 square
feet |
| Restaurants |
2000-5000 square
feet |
| Toy Shops |
1000-2000 square
feet |
| Shoe Shops |
800-2500 square
feet |
| Jewellery Shops
|
500-5000 square
feet |
| Book Stores |
2000-10000 square
feet |
| Furniture Store
|
5000-20000 square
feet |
| Departmental Stores
|
15000-50000 square
feet |
- Making a Huge Killing - An Endless
profit awaits you if you succeeded to let out your commercial
property to any well known brand. Since a multitude
of international brands have realized the potential
of India, they are planning to spread their wings in
India. Like Pizza Hut, which run number of outlets in
places like Delhi and Mumbai, may get a deal done with
you.
Making Ideal use Of Commercial Property
Irrespective of every advantage, metamorphosing the commercial
property as the investment property still holds some risk.
It requires specialized operational expertise or you may
run the threat of losing a high amount of capital. Therefore,
it is always advisable to plan about the areas that can
extract you good money as well as protection.
- Banks - Nowadays, there is a stiff competition
among banks trying to reach to the customers first and gain
points over the competitor. For that reason, they want to
hold a centre at every area whether near or remote. Likewise,
it is quite possible that they want to open a branch at
the location where you have brought a property. Therefore.
Keep scouting local newspapers to apply for the tender.
If succeeded to get the deal, this may bring a lot of money
depending upon the area.
Moreover, the banks always make for good tenants as they
never delay in paying their rent. Often, banks prefer to
get the property on lease.
- Multinational Companies and Financial Institutions
- Accelerating growth of Indian Economy has grabbed the
attention of several multinational companies to set their
establishments here. These interested MNCs seldom purchase
property in India; they always want to have it on rent basis.
Leasing commercial property to MNCs can be highly profitable
as they pay high rent and are generally regular with their
rent payments.
- Business Centre Agreement - If you want
to save tax on your rent, entering into Business Center
Agreement would be the best route to take. Here, your rent
gets termed as service charges thereby saving you the property
tax. When a lessor rents out an ideal furnished place, he
will certainly charge the rent which will be called as service
charges.
Now, you must be thinking about the service tax that government
has been levying on the service charges. Even so, it is
one of the best options to go by. Since, you have eliminated
the need for your client to spend much on the infrastructure,
you can easily ask for a high rent as the market trend prevailing
in that location.
- Pay and Park - If you have a vacant
property in the midst of any happening place, you may consider
leasing it out as parking area which would be a productive
choice for you. Also, there is a heavy rush of traffic these
days which have made parking a big problem for all the drivers.
Moreover, big brands like Mc Donald, Barista, and Shoppers
Stop tend to provide parking space to their visitors. You
may profit from such prospects and make money out of it.