For business owners deciding whether to lease commercial space or buy a building. Compare 5- and 10-year cost scenarios side-by-side, with SBA 504 modeling built in.
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Every dollar of rent leaves your business permanently. Deductible, but never recovered. The advantage: flexibility, low upfront cost, no maintenance risk. The disadvantage: you build zero equity, and rent increases compound over time.
Mortgage payments build equity. Appreciation adds to your net worth. You get depreciation tax shield and interest deduction. The tradeoffs: large down payment, maintenance responsibility, and cash-flow risk if your business weakens.
For most Chicagoland deals, buying beats leasing somewhere between years 5 and 9. Before break-even, leasing is cheaper on a pure-cash basis. After, buying pulls ahead and keeps widening. If you won't be in the space 7+ years, lease. If you will, seriously consider buying.
Most business owners don't realize the SBA 504 program exists. It's specifically designed for owner-occupants of commercial real estate and is one of the most powerful financing tools in business. The structure: 50% conventional bank loan + 40% SBA-backed CDC loan (below-market fixed rate) + 10% down payment. As of early 2026, the CDC portion is available at rates between roughly 5.6–6.0% depending on term.
The catch: Your business must occupy at least 51% of the building (you can rent out the rest). Loans go up to $5.5M. The application process is longer than conventional, but the rate difference and lower down payment typically save owner-occupants hundreds of thousands over the loan life. If you're considering buying and your business fits, SBA 504 should be your starting point.
The math is only part of the decision. A real evaluation also weighs: your business's growth trajectory (will you outgrow this space?), your industry's stability, your personal risk tolerance, whether real estate fits your long-term wealth strategy, alternative uses for the down payment capital, and the opportunity to lease excess space to other tenants. A calculator handles the numbers — a broker helps you think through everything the numbers don't capture.
The math in this calculator is a starting point. The real decision involves finding the right building, structuring the financing, and evaluating whether the timing fits your business. Jason has closed dozens of owner-occupant deals in Chicagoland and can walk you through every step — from SBA 504 strategy to property selection to negotiation.
For most Chicagoland deals, the break-even year falls between 5 and 9 years. If your business is stable and you'll be in the space 7+ years, buying usually wins. If you're in a high-growth phase where you might outgrow the space, leasing preserves flexibility. This calculator shows your specific break-even based on the inputs you enter.
For owner-occupants under $5.5M, almost always. The 10% down requirement frees up capital for your business, and the blended rate is typically 50–100 basis points below conventional. The main downsides are a longer application process (typically 60–90 days to close) and stricter occupancy rules (business must occupy 51%+). If you can wait and qualify, SBA 504 almost always wins on pure economics.
Yes, and it can change the math significantly. If you buy a 15,000 SF building but only need 10,000 SF, renting out the remaining 5,000 SF generates income that offsets your ownership costs. This is a core SBA 504 strategy — you occupy 51%+ and rent the rest. This calculator models only the base case; if you plan to sublease, add a line item manually or request a custom analysis.
This is the core risk of buying — but it's also the core upside. If the business struggles, you still own a real asset. You can lease the building to another tenant, sell it and recover equity, or reposition it. Leasing offers no such backstop: if your business fails, you're still contractually obligated to pay rent through the lease term, often with a personal guarantee. Ownership converts business risk into real estate risk, which is usually lower.
Commercial buildings depreciate over 39 years (residential over 27.5). For a $1.5M purchase with $1.2M allocated to the building (80%) and $300k to land, you get ~$30,770 in annual depreciation deduction. At a 29.6% effective tax rate, that's roughly $9,100 per year in tax savings — adding up to $91,000 over 10 years. This isn't "free money" (there's depreciation recapture at sale), but it meaningfully improves the buy-side cash flow during ownership.