Why Owning Property Isn't Always The Smart Move For Business Owners, According To Dave Ramsey

For many business owners, the idea of owning property is an attractive one. After all, real estate is often seen as a solid investment, and having control over your space can be appealing. However, financial expert Dave Ramsey warns that purchasing property for your business isn't always the best move. In a conversation on the "EntreLeadership" podcast recently, Ramsey explained why leasing may be the smarter option—especially for growing businesses.

The Temptation to Buy

During the episode, a caller named Mike from Dallas shared his situation. He owns a commercial Christmas décor business that supplies large holiday displays for major locations like casinos, hospitals, and town centers. The company is profitable, with a projected $1.8 million in revenue for this year, and doesn't have any debt. However, the business is struggling with storage. Mike currently leases three separate warehouses and is considering building his own space to streamline operations.

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While Mike's desire to own a property is understandable, Ramsey pointed out that doing so could shift focus from the core business to real estate ownership.

The Flexibility of Leasing

Ramsey emphasized that there is no requirement for a business to own its property in order to be successful. In fact, he warned that real estate can sometimes dictate business decisions rather than the other way around. If Mike invests in a warehouse that fits his current needs but later outgrows it, he may face costly limitations. Even if he buys a slightly larger space, growth could eventually force them to lease additional locations anyway.

"Don't let the real estate start telling the business what to do instead of the business telling the real estate what to do," Ramsey said.

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He provided an example from the restaurant industry. A business owner may buy a building in a prime location, but if that area loses its appeal after 15 years, they might hesitate to move because they own the property. As a result, the restaurant could suffer. Similarly, a warehouse that works well today might not be ideal in a few years, and owning it could make relocation more complicated.

A Smarter Approach

So, what should business owners do instead? Ramsey suggested finding a large warehouse to lease—one that provides enough space for operations while maintaining flexibility for future growth. Ideally, he recommends negotiating a lease with an option to purchase. While this can be challenging, especially with real estate investment trusts owning many properties, persistence can pay off.

In his own experience, Ramsey once leased a building with an option to buy, allowing him time to gather the necessary funds. Eventually, he purchased the property, but as his business expanded, he outgrew it—reinforcing the idea that ownership can sometimes become a restriction.

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The Bottom Line

For business owners debating whether to buy or lease, Ramsey's advice is clear: prioritize flexibility. Renting the right space and being willing to move as the business grows can prevent financial strain and allow for smoother expansion. While real estate ownership has its advantages, it should never come at the expense of business success.

As Ramsey put it, "I would rather you rent the right thing at the right place and then just move every five or ten years to the right size and always be a renter than go into debt and buy something and be trapped in it."

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