“To lease or not to lease?” The question of whether to lease or buy is one that many finance departments face and even struggle with on numerous occasions. This is because there are so many dynamics to consider such as the financial health of the organization, changes in technology, political influence, healthcare legislation and needs of local population. The best cause of action is to carefully weigh the pros and cons of both options vis-à-vis individual situations. With so much uncertainty and increasing difficulty in accessing finances, it is imperative that leaders go back and relook at the lease versus buying question.
According to Baker (2018), leasing can in some cases be the most reasonable option when you consider its characteristics. In a lease, a healthcare institution start-up would benefit from 100% financing in the case of a lease and save funds for acquisition of equipment (Atkinson, 2010). This option affords organizations that cannot afford to buy low upfront cost into acquiring premises. As regards medical equipment leasing is the best option as it helps avoid obsolescence of equipment and allows for upgrades when necessary. This option also removes the responsibility of disposition from the lessee.
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The option to buy property is also an attractive investment especially now that interest rates are so low. Unlike with a leased building, the buyer has more control in that they can decide which areas to occupy and are not limited on duration of occupancy and can decide which tenants to allow. When the property has been paid off, a marketable asset will be gained which can even appreciate over time not forgetting the ability to generate income through tenancy (Baker, 2018).
This analysis gives a summary of where each option is better than the other by giving specific examples. It is clear that both options have significant benefits in specific situations and therefore one can deduce that when it comes to procurement a mix is the best option.
References
Baker. K, & Realtytrustgroup.com. (2018). [online] Available at http://www.realtytrustgroup.com/wp content/uploads/2017/02/Lease_v_Own_PRESS1.pdf
Tandfonline.com. (2018). [online] Available at: https://www.tandfonline.com/doi/abs/10.1080/00185868.1986.9950535?journalCode=vhos20
