10/31/2005
Advice from Nashville's leading Financial Aid Advisor Dave Ramsey
Dave Says
By Dave Ramsey
Author of:
Financial Peace and
The Total Money Makeover
"Lease or buy retail space?"
Dear Dave,
I’m looking to start a small retail business. I’m still in the research phase, and I’m trying to decide if it would be better to lease commercial retail space or buy a building for my business. What’s your opinion?
Rick
Dear Rick,
In the beginning I would lease for as short a term as possible, maybe three years. Make sure there’s a buyout provision somewhere in the terms of the deal, because if your business fails you don’t want to own an empty building and go broke with the lease. At the very least, you want to have the ability the sub-lease.
When I stopped running my business out of our living room years ago we rented a little place in the cellar of a nice office building. It had no windows, was back in the corner and had been sitting empty for three years. It was premium office space, just a bad location within the building, and they let me do a month-to-month because of that.
Now, you don’t want to do that with retail, because in retail location is everything. The point is that I didn’t want to be tied up in something and crash and burn because of a stupid lease.
Never buy real estate when you’re dealing with an unproven idea. You can do that later when you’ve made a bunch of money with the business.
- Dave
More About Dave
Dave Says Articles
Dave Ramsey History
Dave Ramsey.com
