At some point while developing your business you will have to decide if you should buy or lease office space. Alt text: office station with computers and a light sofa.
The majority of business owners start their business with a smaller number of people in smaller office space. In the beginning, for most business journeys there isn’t a need for a humongous office. Also, in that case, most offices are rented spaces. However, if your business starts growing at a fast pace, very soon you might be faced with a serious problem. You will need more space and a bigger office. That is a perfect moment to ask yourself the question: Should I buy or lease an office space?
Buy or lease and office space - how to make the right decision?
Just like with most decisions in life, you must realistically look at all the pros and cons. Only afterwards might you be able to make the right decision for your business and your employees. Since you might need some guidance, we will do our best to be your business advisor.
Having a blue wall in the office is a great way to brighten up the room and give it a cool vibe. At text: office with light interior and a blue wall.
Pros of buying an office space
In case you decide to buy an office space, here are some great things that you are bringing to the table.
Static costs – Once you purchase commercial real estate, you will know the exact amount that you need to pay every single month. This amount will not differ on an annual level as rents can. So, you are pretty much settled and aware of how much money you need to pay. This way no unwanted surprises will cross your path.
Tax deduction – When owning commercial property there is a large possibility that you will have some type of tax deduction. These tax deductions can be related to mortgage interest, property taxes and similar items. These details are very important when you are a new buyer planning your taxes.
More income – In the unfortunate event that your business starts going south and you must shut it down, your commercial property can be a great thing to fall back on. By renting it, you can get a steady income every month. This is a great way to invest in your retirement plan and in your future.
Cons of buying an office space
We went through the positives of buying an office space. On the contrary, here are some negative aspects.
Much less flexibility – Once you purchase office space for your business you must stick with it. There will not be much room for change. Also, financially you will have less flexibility. When this type of investment happens, not many business owners have leftover capital to invest in other potential projects. You do not want to overpay for your home and the same goes for your office space.
Investing a large sum of money at once – When buying commercial real estate, you will need a large starting amount in order to initiate the process of buying. Some of the initial costs are appraisal costs and maintenance costs. Also, let’s not forget about the down payment that you must pay for the property and possible property improvement costs.
Open space offices are the new it trend in office designs. Think about it. Would an open space office be a good fit for your business? Alt text: An open space office with a lot of windows and light.
Pros of leasing an office space
Since we are trying to determine should you buy or lease an office space, let us explore why it would be good to lease a space for your thriving business.
Prime locations – when leasing an office, you will have a better chance to land a real estate piece that is located in a prime location or the business side of your town. When buying an office this is a bit harder because the costs of purchasing a prime-time commercial real estate are colossal.
More money for other investments – instead of poring all your capital into purchasing an office, you will have some capital set on the side if a great investment opportunity comes your way.
Fewer headaches – Once you are a property owner, you have many different things to attend to. Everything from property taxes to maintenance planning will fall into your lap. When you rent, these things aren’t your concern, but your landlords. In case you already found your perfect office for rent, check out Purple Heart Moving Group, so you can experience a perfect commercial moving experience.
Cons of leasing an office
Finally, here are the negative aspects of leasing an office space. In case you are still indecisive whether you should buy or lease office space, this might help.
Monthly expenses can grow – when renting an office space, there is always a chance that your rent can rise on an annual basis. Also, this can happen once your lease is close to its expiration date. Especially if your business is doing well, do not think that your landlord would hesitate to increase your rent with the first available chance.
No equity – you are filling your landlord’s pockets with no money going your way for your future and retirement funds.
If you want your employees to be productive, make sure they have a comfortable space to work in. Alt text: Multiple people sitting at a table and working together as team.
No matter if you decided to buy or lease and office space, use professional help when you move
Office relocation is one of the most complicated moves that you can endure. Don’t even think about doing it on your own. It doesn’t matter if you need your corporate offices moved to another location or you need your little local office moved, either way, you will need serious help. Spare yourself the stress and hire help.
We wish we could help you and make this decision for you, but unfortunately, we cannot. The only thing we can do is point out the good and the bad aspects (which we did) and let you decide what is best for you and your business. Deciding to buy or lease an office is something that can change your life since it is potentially a really big investment. Therefore, do not rush the process and decision making. Be patient and carefully weigh your options. Also, as our final piece of advice, think about hiring professional financial and business advisors to assist you. Regardless of which option you choose, we wish you happy office hunting.