Whether it is better to buy or lease a dance studio depends on many factors, and there is no universal answer for everyone who is wondering. For most people who are just starting, the most common solution is to lease a place with an option to buy it after a few years. In the beginning, you will probably need a small place, and then when your business grows, you can find something bigger. You know very well that becoming a professional dancer is difficult, as you have already gone through the main struggle. Therefore, you are well-equipped with the patience and determination necessary for the challenge of finding a perfect place for your dance studio. Now, you need to look at the main pros and cons of both leasing and buying a dance studio, so you can decide which is right for you.
When to lease
Leasing a place is usually the first step for many dance studios, just because there is no other option. Buying a dance studio requires a significant financial investment and commitment. Leasing lets you test the market and location, and it also allows you to grow your clientele and make a profit. Building a reputation and client’s trust and achieving financial stability usually takes a few years.
Deciding on the studio size
As you grow in popularity, you may overgrow the studio. When you’re buying, it’s tough to predict exactly how big of a space you’ll need and how many dancers you’ll have. When you’re leasing, start small and then find a bigger space when the time is right. If the situation demands, you can also downsize much more easily when you’re leasing than when owning a place. If you own a space and need to sell it, finding the right customer may prove hard and take a long time until you’re able to dance again in the new studio after finishing all the buying preparations.
Landlord and lease contract
Having a landlord will have its advantages and disadvantages. They may not be so cooperative in terms of making adaptations and changes to space. On the other hand, a landlord will take care of any needed repairs and upgrades.
When you decide that you’ll be leasing the space, remember to read your lease contract before signing it carefully. Be sure to understand all the terms. If there is anything that concerns you, discuss it with an attorney. You have the greatest leverage to negotiate when you first sign the lease, so be careful and thorough, and don’t rush the process.
Ensure that you know all maintenance costs, what utilities are included, etc. Confirm if the regular maintenance and improvements will be done on time and without extra charges.
If you plan on leasing a space in a big mall or one of the big retail complexes, consider negotiating an exclusive-use clause – which will basically prohibit your landlord from renting space inside the building to other tenants who offer dance classes just like you. Distancing from the competition means a great deal in any business.
Finally, some landlords will ask you to commit for several years. Therefore, you need to review the sublease policy thoroughly in case you decide to move sooner.
When to buy
The first thing that comes to mind concerning buying a dance studio is more freedom and flexibility. Like taking control of your flexibility in dance, you also need the flexibility to adapt the space to your needs, priorities, and preferences. However, buying is a huge financial risk and comes with many obstacles. The first concern of every dance studio owner is how to come up with a down payment. In most cases, leasing for a few years will allow them to earn enough money to cover it.
In the end, when you realize that you could own the space for nearly the same amount of money that you pay for the monthly leasing rate, you really begin to wonder: do you want to build somebody else’s future and dreams or your own?
When purchasing a dance studio, you’ll usually have a commercial mortgage with monthly payments similar to the lease rate. The initial down payment is, in most cases, about 20 percent of the total property price. However, taking out a loan is an expensive process.
You’ll have to pay for:
- Attorney fees
- Inspection fees
- All closing costs, such as bank fees, processing fees, and appraisal fees.
Also, once you own the property, you’ll have many more costs that you may not have considered, for instance, building insurance or a water bill, etc.
After you’ve finally dealt with all the initial costs, you’ll start to see the main advantages of owning a dance studio. As you pay your mortgage, you will build equity in your property. Having real estate mitigates the risks if your business fails. You’ll have an exit strategy, to sell the place or to lease it. Having an asset is always valuable and can be a real lifesaver. When you’re the property owner, there is a possibility of tax deductions for mortgage interests, as well as for maintenance costs and property depreciation.
When you need a dance studio relocation
Regardless of whether you have decided to buy or lease, you need to think about moving your dance studio to a new location in advance. Moving a business isn’t easy, so be prepared for everything. Your dance classes might suffer due to the transition to a new place. You’ll need to announce a break because of the relocation and the adaptation of the new space.
You need all the help you can get to start your business again as soon as possible. Luckily, there are companies you can hire, and Bluebell Relocation Services proved to be of great help for an easy transition of businesses when they change locations. Knowing that you have someone reliable to hold onto will mean a great deal in this challenging process.
Location is vital when choosing to buy or lease a dance studio
There is just one more thing left to consider when deciding to buy or lease a dance studio and when relocating – the importance of location. Parking availability and public transportation possibilities are the main factors to consider. If you pay more for a space in a high-traffic area, you’ll probably have more dancers and the chance to increase the membership price. Choosing a remote location may initially cost you less, but you’ll have to pay more for marketing and advertising.
We wish you all the luck in the process of making such an important decision, and we hope that your business will thrive no matter what you choose.
Alexandra Smith is a proud owner of a dance studio in New York City. She has been a passionate dancer since her early childhood. Alexandra is also a blog writer, nature lover, and adventurer.