Industrial Real Estate Tool · Free
Lease or Buy Your Warehouse?
Rent is a bill that never builds equity; a mortgage is a bigger bill that does. See which one actually wins for your business — rent against debt service and reserves, conventional against SBA 504, with the break-even year and what the building is worth when you leave.
The building
Base rent on a comparable NNN lease. Taxes, insurance and CAM are the same either way, so they're left out.
Financing
Illustrative. Get a current quote.
Ownership costs & your situation
Roof, paving, HVAC — the landlord's problem when you rent.
Rent, interest and depreciation are deductible. 0 to ignore taxes.
What the down payment could earn if left in the business.
Owning comes out ahead
$401,237
in today’s dollars over 10 years, counting the $585,000 you’d put in up front and what the building sells for. Owning breaks even in year 3.
Year-1 rent
$22,500/mo
$16,875/mo after tax
Year-1 cost of owning
$28,729/mo
$21,194/mo after tax
Cash to buy
$585,000
$4,500,000 price · $4,050,000 loan
Return on that cash
12.9%
vs. 8% alternative
If you sold at the end of each year
Cumulative advantage of owning over leasing (cash saved each year + sale proceeds − cash invested). Gold means owning is ahead.
| Year | Rent (after tax) | Own (after tax) | Loan balance | Building value | Owning ahead by |
|---|---|---|---|---|---|
| 1 | $202,500 | $254,328 | $3,985,132 | $4,635,000 | -$218,710 |
| 2 | $208,575 | $255,448 | $3,915,782 | $4,774,050 | -$64,135 |
| 3 | $214,832 | $256,646 | $3,841,640 | $4,917,272 | $104,253 |
| 4 | $221,277 | $257,927 | $3,762,375 | $5,064,790 | $287,011 |
| 5 | $227,916 | $259,296 | $3,677,633 | $5,216,733 | $484,719 |
| 6 | $234,753 | $260,760 | $3,587,035 | $5,373,235 | $697,986 |
| 7 | $241,796 | $262,325 | $3,490,178 | $5,534,432 | $927,451 |
| 8 | $249,049 | $263,998 | $3,386,628 | $5,700,465 | $1,173,783 |
| 9 | $256,521 | $265,787 | $3,275,924 | $5,871,479 | $1,437,685 |
| 10 | $264,217 | $267,699 | $3,157,570 | $6,047,624 | $1,719,894 |
What if the building doesn't appreciate?
| Value growth | Owning vs leasing (yr 10) | Break-even |
|---|---|---|
| 0% / yr | $249,651 | Year 8 |
| 2% / yr | $1,185,852 | Year 4 |
| 4% / yr | $2,302,696 | Year 2 |
| 6% / yr | $3,630,525 | Year 2 |
Owning is a leveraged bet on the building and the location. If it only wins at 4%+ appreciation, that’s a real risk to weigh — not a reason to ignore it.
Not modeled: capital-gains tax and depreciation recapture on sale, property-tax reassessment after a purchase, lender covenants, and the value of the building’s flexibility to you. Depreciation uses 80% of price over 39 years.
Renewing soon — or curious what you could own?
Email yourself this analysis. Ryan can show you owner-user buildings in your size and price range, and walk through how SBA 504 financing would work on the numbers you just ran.
Submitting does not create a brokerage relationship. MaxLife Realty LLC · Ryan Solberg, FL Broker License #BK3354351.
How the owner-user comparison works
On an NNN lease you already pay taxes, insurance and maintenance, so the real decision is base rent versus debt service plus reserves, weighed against the cash you put down and the value you walk away with. This tool compares those, year by year, after the tax effect of deducting rent (lease) or interest and depreciation (own).
It reports the break-even year — the first year that selling the building leaves you ahead of leasing — a present-value advantage using your own return on cash, and a value-growth sensitivity so you can see how much of the case rests on appreciation. To see what a lease really costs before comparing, use the warehouse lease cost calculator; to test the loan, use the DSCR calculator. Prefer a generic model? See the rent vs. buy calculator.
Watch First
The lease-or-buy decision, and how SBA 504 changes it
Lease vs. buy FAQs
Is it better to lease or buy an industrial building?
Buying tends to win when you'll stay in the building for many years, your space needs are stable, rents are climbing, and you can finance with a small down payment. Leasing wins when you might outgrow the space, your cash earns a high return inside the business, or the building would need major capital work. The break-even year in this calculator tells you how long you'd need to stay for owning to pay off under your assumptions.
How does SBA 504 financing work for a warehouse?
The SBA 504 program is built for owner-users. A typical structure is a bank first mortgage for about 50% of the cost, a Certified Development Company (CDC) second mortgage backed by an SBA debenture for up to about 40%, and roughly 10% down from the buyer. The CDC portion carries a long-term fixed rate. The business generally has to occupy a majority of an existing building (at least 51%), and extra down payment can apply for start-ups or special-purpose property. Confirm current program rules and rates with a CDC or SBA lender — the rates in this calculator are illustrative.
Why does the calculator leave out taxes, insurance and CAM?
Because on an NNN lease you pay them, and as an owner you pay the same costs — they cancel out of the comparison. What differs is base rent versus mortgage payments and reserves, the cash you put down, and what the building is worth when you leave. One caution: Florida resets a non-homestead property's assessed value after a change of ownership, so the property tax bill after you buy can be higher than the one the landlord was paying. Check the county property appraiser's estimate before you commit.
What ownership costs do people forget?
Capital repairs are the big one — roof, paving, HVAC and dock equipment are the landlord's problem when you rent and yours when you own. The calculator includes an annual reserve per square foot for this. Also consider selling costs, the lower liquidity of real estate compared with the rest of your balance sheet, and the fact that a building sized for today can be wrong for your business in five years.
Can I lease out the extra space if I buy a bigger building?
Often yes, and it can improve the math substantially — a tenant's rent offsets your debt service. This calculator assumes you occupy the whole building. If you'd buy more than you need, run the numbers on just your share, or talk to a broker about buildings with a multi-tenant option and how lenders treat the extra income.
Disclaimer: This calculator is for educational and informational purposes only and is not tax, legal, or financial advice or a loan offer. Financing terms shown are illustrative starting points, not quotes. It does not model capital-gains tax or depreciation recapture on sale. Consult a CPA, an attorney and a qualified commercial lender before deciding to buy.
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