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Renting vs Buying a Warehouse – Which Is Better for Your Business?

February 4, 2020 Warehousing

Are you in a dilemma of renting vs buying a warehouse? Do you find yourself asking whether renting a warehouse or buying a warehouse is best? Then you need to keep reading to find out the best decision for your business.

Buying a warehouse requires you to put so much capital while renting a warehouse can be cost-effective. When making this decision, you need to consider how much money you have in your business account.

Warehousing employs many Americans. Nearly 950,000 people in the US are employed in warehouse and storage sector. Hence you would be contributing immensely to the economy.

Here are the pros and cons of renting vs buying a warehouse.

1. Renting vs Buying a Warehouse Tips

You have to consider several factors before deciding whether to rent or buy a warehouse. They include:

• Location

Getting a warehouse at the perfect location is key to the improvement of your business. Finding the best location for a warehouse can help with your distribution business.

You need to look at how accessible the warehouse is from the road. Does the warehouse have access to lighting at all times?

Also, how secure is the area? You don’t want to store your goods in a place where they can be stolen. You need to ensure that the area around the warehouse has enough security.

Additionally, you need to consider how far the warehouse is from your customers. You don’t want to subject your customers to long drives to find your products. Chose the perfect location that will work for you and your customers.

• Maintenance

When you rent or lease a warehouse, you don’t need to think about the maintenance of the warehouse. This is because this is the work of the landlord or your property manager.

Maintaining the warehouse requires time, and it is costly. You need to put in money to ensure that the warehouse is functioning properly. Additionally, the maintenance requires you to invest your time.

• Current Cash Flow

The decision to buy or lease a warehouse may lie solely on your cash flow. Buying a warehouse is expensive and requires you to invest in getting a great warehouse.

If your business is short on cash and requires the cash flow to run the business steadily, then leasing a warehouse could be the right decision for you. You might need the money to get new stock and ship what you already have in the story.

This means that you need to ensure you have enough cash flow.

If you have enough savings and you are sure that your business will not go down when you invest in a warehouse. Then you should look for the perfect warehouse to invest your money.

• Mobility

This refers to the flexibility of your business. If you have just established a business in a new area and you are not sure of what the future holds. Then buying a warehouse could be a bad idea for you and your business.

If you already own a business that has been doing well in the area for around ten years and you have hope that it will grow in the future. Then buying a warehouse could be the right move to make.

2. Renting Vs Buying Warehouse Comparisons

There are several advantages and disadvantages of renting and buying a warehouse. You have to decide on what offers a competitive advantage to your firm.  

Pros Of Renting A Warehouse

• You Have More Options

When it comes to option on space and location, renting a warehouse has the advantage. There will always be better warehouses with a bigger space than the one you are using. This gives you the option of expanding and moving to a better warehouse.

• Less Management

One of the most demanding jobs of owning your warehouse is management. You need to ensure that heating and cooling is working and other maintenance jobs.
This job takes most of your time and energy. When you are renting the warehouse, all maintenance is left for the property manager or the landlord.

• Easy To Relocate

When you don’t own the warehouse, you can easily pack your things and move to a new location. But when you own the warehouse, you don’t have the luxury to up and leave with your goods.

This gives you more freedom and flexibility to your business.

Cons of Renting a Warehouse

• Limited Growth

If your business grows and expands, it is difficult to grow in the warehouse. This is because you can’t adjust it to fit your needs. This limits your organization skills.
This results in an expensive relocation to another area.

• Less Control of the Warehouse

If you want to adjust the warehouse to your liking, you might find that it takes time since you have to talk to the landlord. This can be frustrating and may limit your business growth.

Pros of Buying a Warehouse

• Equity

Owning a warehouse comes with its benefits. If you own a warehouse for your business, you can use it as equity to secure a loan

Additionally, you can use the warehouse to facilitate other business deals. Moreover, owning a warehouse increases the value of your business.

• Total Control of the Property

Owning the warehouse allows you to have total control of the warehouse. You can decide if you want to change the layout of the warehouse to fit your needs without asking for permission.

Additionally, if you feel like you want more shelves and storage space, you can easily do that without looking for the landlord. This gives you the freedom to redesign the warehouse.

• Fixed Costs

Have you ever woken up to find that your landlord has increased the rent? This could be frustrating, especially if you had not planned it in your budget.

The advantage of owning a warehouse is that it operates at a fixed cost. This ensures that your monthly rate remains the same throughout.

Cons of Buying a Warehouse

• High Initial Costs

Buying a warehouse is very costly, and it requires a large investment. This money could be used to expand the business and gain you more profit.

Moreover, you have to pay for any renovation done to the warehouse on top of the purchasing fee.

• You Incur High Maintenance Bills

Having control of a warehouse means that you have to pay for the maintenance cost as well. You need to cater for any job done to ensure the warehouse stays in great shape.

Bottom Line on Renting vs Buying Warehouse Tips

When deciding on renting vs buying a warehouse, you need to take your time.

This is because a decision like this affects your business directly. Contact us if you are looking for delivery and warehousing services.