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Calcimator

Lease vs Buy Commercial Calculator

Compare the net present cost of leasing versus buying commercial property over a holding period.

Total Lease Cost

$1,719,581.90

Net Buy Cost

$367,657.89

Inputs

SF
$/SF/yr
%/yr
$
%
%
years
years
%/yr
% of value

Comparison

Savings (Better Option)

$1,351,924.00

Total Buy Outflows

$1,511,529.67

Equity at Sale

$1,143,871.77

Future Property Value

$2,015,874.57

Monthly Mortgage

$7,596.08

Buy Advantage

Yes

How to Use This Calculator
  1. Enter Space Needed in square feet and Annual Rent per SF plus Rent Escalation % per year.
  2. Enter Purchase Price, Down Payment %, Interest Rate, and Loan Term for the buy scenario.
  3. Set Holding Period in years to define the comparison horizon.
  4. Input Appreciation Rate % and Annual Maintenance % for the ownership cost model.
  5. Review Total Lease Cost vs. Net Buy Cost over the holding period.
  6. A lower Net Buy Cost favors purchasing; consider tax benefits of ownership when the difference is close.

How the result changes with Holding Period

Holding PeriodTotal Lease CostNet Buy Cost
3.9$627,544.05$180,186.66
11$1,921,169.35$385,316.06
20$4,030,556.17$327,118.13
27$6,106,445.03$111,696.59

What each input means

Space Needed
Total square footage needed.
Annual Rent
Current annual rent per square foot.
Rent Escalation
Annual rent increase percentage.
Purchase Price
Purchase price of comparable property.
Down Payment
Down payment as percentage of purchase price.
Interest Rate
Annual mortgage interest rate.
Loan Term
Mortgage amortization period.
Holding Period
Number of years to compare lease vs buy.
Appreciation Rate
Expected annual property appreciation.
Annual Maintenance
Annual maintenance as percentage of property value.

How this is calculated

Worked example, using the default values

  1. Identify Input Parameters
    4 parameters
    Space Needed = 5000, Annual Rent = 30, Rent Escalation = 3, Purchase Price = 1500000 = 10 input(s) provided
  2. Calculate Total Lease Cost
    Total Lease Cost
    1719581.9 = $1,719,581.9
  3. Calculate Net Buy Cost
    Net Buy Cost
    367657.89 = $367,657.89
  4. Calculate Savings
    Savings = Math
    1351924 = $1,351,924
  5. Calculate Total Buy Outflows
    Total Buy Outflows
    1511529.67 = $1,511,529.67

Engine last updated . Checked against 1 independently-derived test — how we verify calculators.

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