Buying the Building: Compare Total Occupancy Cost

Build the lease baseline

Include rent, scheduled increases, common-area charges, maintenance responsibilities, insurance requirements, and renewal risk. Read the actual lease rather than relying on the base rent shown in a financial statement.

Build the ownership model

Include acquisition cash, financing, taxes, insurance, maintenance, repairs, and future capital projects. Obtain inspections and contractor input for major systems. Deferred roof or mechanical spending can materially change the apparent savings.

Test business flexibility

Review the space needed today and under growth or contraction scenarios. Consider whether location, layout, or zoning could limit future operations. Ownership can create stability, but an unsuitable building can also constrain the business.

Plan the holding and exit decisions

Compare the expected holding period with transaction costs, financing terms, and future property needs. Coordinate ownership structure and related-party arrangements with qualified professionals. Keep the real estate decision connected to the operating business plan.

Action checklist

• Use the full lease cost
• Budget capital repairs
• Inspect major systems
• Test growth and contraction
• Model the holding period and exit

Is a lower mortgage payment enough reason to buy?

No. Total cost, upfront capital, maintenance, flexibility, and the business future needs all matter.