WHAT IS BETTER? Rent warehousing / buy a warehouse?

David Benedik -

When you realize you need storage space, it’s hard to assess whether to buy or rent a warehouse.

In this article, we will discuss some points that will help you make an informed decision.

We believe that there are 7+ essential benefits that support renting a warehouse before building or purchasing that warehouse.

Buying a warehouse

PROS:

  • Fixed costs: The mortgage rate is usually lower than the rent, which ensures that the monthly interest rate remains consistent over time.
  • Additional income potential: If your facility has more space than you initially need, you can lease to other companies, generating income to offset mortgage costs. One of the websites where you can rent out the empty space in the warehouse to others is StoringCargo.com .
  • Control of the property: By purchasing a warehouse, you become the owner of the warehouse, which means that you completely decide how the warehouse will be set up and arranged. Renovating a facility or adding services is entirely up to you. You can manage it as per your needs.
Warehouse for sale

CONS:

  • Higher upfront costs: The purchase will cost - significantly more - in advance. The money needed to pay for the property and the cost of any equipment or renovation needed could better suit your business that you spend elsewhere.
  • Capital requirements: If you spend your capital to buy a warehouse, you could find yourself in a not-so-desirable position that you would not be able to expand your business or, worse, meet your current business obligations.
  • Additional maintenance costs: As you are the owner, you will be responsible for maintaining and repairing of the property.
  • Forklift and labor costs: Forklift costs and labor costs are quite a financial burden.

Renting a warehousing service

PROS:

  • Available capital: Because the invested capital in renting a warehouse is minimal compared to buying or constructing a new warehouse, owners can better utilize their funds.
  • No repairs and maintenance costs: When renting a warehouse, tenants do not have to worry about maintenance and repair costs.
  • More time: Less time spent managing. So you have more time to focus on your business.
  • Tax Deductions: Financial advantage of renting a warehouse is a tax benefit.
  • Easier to relocate: If you need more space or just a new location, renting makes it much easier for you to relocate than if you were responsible for the entire warehouse.
  • Less Start-Up Time: Building a warehouse from the bottom takes at least a year. During this time, business owners have to give up many business opportunities. Therefore, renting is a much more appropriate solution, as you do not miss valuable opportunities.
  • Less Paper Work: When you want to build a warehouse you need to manage the piles of the necessary documentation, from building permits, utilities, and much more. You are spared all this when renting a warehouse.
  • There is no need to rent a forklift: The warehouse you hire, takes care of the forklift and workforce.

CONS:

  • Rental increase: Rents are usually subject to an annual increase in rent and an increase in costs whenever the lease is renewed.
  • Less control over the facility: You have much less control over the property owner’s decisions and may be subject to things like raising interest rates or even terminating the contract.
  • Limited growth: If your business expands faster than anticipated, it will be much harder to change the current facility to suit your needs, which can lead to high relocation costs.

Price analysis: Purchase vs Rent

Still not sure if it’s better to rent or buy a warehouse? Let’s take a look at a brief price analysis where we’ll find out what’s more affordable.

Purchase a warehouse: The approximate price of the warehouse, which measures around 500m2, is currently € 300,000. This price does not include land lease and excavation.

Warehouse rental: The average price of renting a warehouse on www.StoringCargo.com  is 60 €/day for around 20PAL.

Buy or rent a warehouse?

With this data, we can analyze how many years it would take to rent a warehouse every day to come up with the purchase price of the warehouse. So:

300.000€ : 60€ = 5.000 days = around 14 years !

So it would take about 14 years to rent a warehouse every day and to get the same price as if you were to buy a warehouse. That's a lot, isn't it?

So if you’re deciding between buying and renting a warehouse, rent a warehouse at StoringCargo and save money for other things.

!!! Don't forget that you don't have to pay for the forklift and the worker's costs when renting, as the warehouse takes care of that in its entirety.

Now that we know it’s cheaper to rent a warehouse, where to rent warehouses?

On the StoringCargo website, we enable people to choose from more than 480 registered warehouses around the world.

This is the principle of Airbnb/Booking, where the warehouse performs the manipulation for you. Renting a warehouse does not mean renting a warehouse in its entirety, but only renting a warehousing service that already includes loading and unloading and other services.

The best part is that you pay as much as you spend. StoringCargo also takes full care of all payments and documentation.

You can see the entire warehouse booking process in THIS blog post.

Summary

In this article, we initially wondered if it was more affordable to buy or rent a warehouse. After all the presented advantages and disadvantages on each side, we made a price analysis and found out that it would take 14 years every day to rent a warehouse to get to the same price as when buying a warehouse 😲. Finally, we looked at where we can rent the most affordable warehouse and why choose this particular online platform.

I'm sure you're even more interested, so visit StoringCargo.com or email me at info@storingcargo.com.