Differences Between Leasing vs. Owning a Residential Care Home

When deciding whether to lease or own a home to operate your memory care business, it’s essential to weigh your options carefully. Each choice brings its benefits and challenges, and understanding them can help you make the decision that’s right for your goals and circumstances. At Legato Living, we understand these decisions are pivotal for entrepreneurs seeking to make a difference in dementia care through residential homes. Here’s a closer look at the pros and cons of leasing versus owning a residential property.

Benefits of Leasing

Leasing can be a smart and practical option for many business owners. Here’s why:

• Lower Initial Investment
  Leasing a property minimizes the upfront financial hurdle. It requires less capital than purchasing a home, enabling you to start your memory care business quicker and allocate more funds towards initial operational needs like furnishings, equipment, and staff.
• Flexibility
  Leasing allows you to adapt to changes as your business grows. You can scale your operations more easily by transitioning to larger or different properties without the long-term commitment of ownership.
• Maintenance and Repairs
  Many lease agreements place the burden of significant repairs or maintenance on the property owner, freeing you to focus on providing high-quality care without costly surprises.
• Achieve Your Goal Quicker
  With fewer upfront financial and logistical hurdles, leasing can fast-track your ability to open and manage your memory care home, helping families in need sooner.

Disadvantages of Leasing

While leasing offers flexibility, there are drawbacks:

• Lack of Equity
  With leasing, your monthly payments do not contribute to building equity. Once the lease ends, you don’t own the property or enjoy the benefits of real estate appreciation.
• Increase in Lease Terms
  Lease agreements can include periodic rent increases, which can significantly impact operating costs over time.
• Limited Customization
  Leased properties may restrict renovations or structural changes, which can limit how much you can tailor the home to meet your business or residents’ needs.
• Uncertainty
  Lease renewals aren’t guaranteed, potentially leading to unexpected relocations that disrupt operations.

Advantages of Owning

Owning the home you operate your memory care business from is a long-term commitment but comes with powerful benefits:

• Equity
  Ownership allows you to build equity over time. Monthly mortgage payments go towards owning the property outright, which can contribute to your long-term financial security.
• Stability
  Owning provides stability, as you’re not at the mercy of lease renewals or landlords’ decisions. This permanence can also be reassuring to families choosing your care home for their loved ones.
• Future Income
  An owned property has the potential to generate income in the future, whether through sale, lease, or business expansion opportunities.
• SBA Loan Opportunities
  Residential properties for memory care use often qualify for Small Business Administration (SBA) loans, which can assist with financing and make property ownership more accessible.

Disadvantages of Owning

Owning, while lucrative in the long run, comes with higher upfront and ongoing considerations:

• Higher Initial Investment
  Purchasing a property requires significant capital. Down payments, closing costs, and any necessary renovations can present a substantial financial challenge.
• Potential Maintenance and Repairs
  As the owner, you are responsible for all repairs, upkeep, and unexpected maintenance emergencies. These costs can add up and should be factored into your long-term budget.

Operational Costs to Keep in Mind

Regardless of whether you lease or own, some operational costs remain constant. Furniture, fixtures, equipment, employee wages, insurance, utilities, and permits all need to be factored into your financial planning. Ensuring you have a clear understanding of these expenses will help you build a resilient and successful memory care business.

Explore Your Options with Legato Living

Leasing vs. owning is not a one-size-fits-all decision. It depends on your financial position, long-term goals, and operational needs. Legato Living provides franchise opportunities specifically designed to make residential memory care accessible and impactful, whether you decide to lease or own the property.

If you’d like to learn more and explore how Legato Living can help you achieve your goals in the memory care space, visit franchise.legatoliving.com. We’re here to support you every step of the way as you make a difference in the lives of individuals living with dementia and their families.