Rent or buy a warehouse. Which is more profitable?

If you have a commodity business, you need somewhere to store your products. Sooner or later you will be faced with the choice of renting a warehouse or buying premises outright. Together with the experts from Sargona Private Capital company, let's find out how to choose the best option for your situation and avoid falling into a financial hole.

If you have a large sum of money and your business is growing steadily, buying a warehouse can be a great decision. Here's why:

• Rental income. If your business decides to move or some of the space becomes unused, the warehouse can be rented out and make a profit.
• Complete flexibility. If you want to - redesign the premises, add production equipment, make repairs to suit your needs. No coordination with the landlord!
• The asset is owned. Warehouse can be sold if money is urgently needed or the business changes direction.

When you should buy a warehouse

• You have a stable income and you are confident in the long-term success of your business.
• You plan to rent the warehouse to other companies.
• It is important for your business to have control over storage conditions (e.g. specific temperature settings or security).

Buying pitfalls
Not everything is as smooth as it seems. Buying a warehouse has its own risks:

• Large investment: the purchase will hit the budget hard. This money could have been used for business development.
• Difficulty in selling: if the business expands or changes location, it can be difficult to sell the warehouse, especially if the property market is unstable.
• Additional costs: repairs, maintenance, taxes - all of this will be on your shoulders.

Renting is suitable for those who are just starting a business or don't want to risk a large sum of money right away. Here are the main advantages of renting:

• Flexibility. Like a different warehouse? Increased business volume? It's easy to change the premises to a more suitable one.
• Repairs at the owner's expense. Maintenance and repairs are borne by the landlord. That's a significant savings.
• Large selection. The rental market offers warehouses for every taste: different sizes, equipment and location.

Sargona Private Capital Ltd experts recommend when renting is better

• If you are just starting a business and want to minimise risks.
• You need a temporary solution until you figure out your long-term plans.
• You have an unstable market or seasonal business and need maximum flexibility.