Control – The owner of a property has, subject to applicable laws, the ability to operate the property in any way the owner sees fit. In addition to controlling use, an owner has the ability to control costs associated with the property.
Income – If all or a portion of the property is leased, rental income from the leases can be used to pay the mortgage, taxes and insurance on the property, fund the owner’s principal business, or be used for other investments.
Tax Savings – A property owner can take advantage of the tax savings resulting from depreciation and the mortgage interest deduction.
Appreciation – The owner of real estate is entitled to all of the appreciation in value.
Risks – Risks to ownership include potential damage, obsolescence and illiquidity, meaning real estate can’t be sold quickly to raise cash.
Inflexibility – A space that worked for the owner cannot necessarily be expanded or reduced as business needs change.
Initial Capital Outlay – A down payment ties up cash that could be used to fund the company’s operations or other investments.
Financing – The ability to obtain a loan depends not only on the company’s financial health, but on the financial markets as well.
Legal Compliance – Changes in laws or zoning could result in unforeseen and expensive cash outlays.