When you grow your business, you’ll eventually face the prospect of upgrading your space. This can lead you to look for office space for lease, or even to consider buying office space. The key is to carefully weigh the pros and cons of both options before you jump in. This way, you’ll know which option suits your venture better, and you won’t break the bank.
Buy Office Space – Pros
First up are the benefits of buying your own office space. Not all of the benefits will necessarily apply to your business, but we picked out the most common ones.
- Fixed Costs – Buying an office space allows you to lock in a price for your commercial long-term mortgage.
- Tax Deduction Potential – When you own your own space, you gain the advantage of a number of tax deductions.
- Additional Income Streams – If you don’t use all of your space, you can easily rent it out to other businesses. This gives you additional income each month.
Buy Office Space – Cons
Of course, there are drawbacks to purchasing a space. They are:
- Costs, Both Upfront and Ongoing – Buying office space will cost you more upfront. You’ll have to pay for the appraisal service, the property itself, routine maintenance costs, potential property improvement costs and a down payment, plus mortgage insurance in most cases.
- Non Flexible – A growing or new business may have unexpected needs going forward, and your newly purchased space may not be enough. This could force you to sell the property and buy again if you find that your requirements have changed.
Office Space for Lease – Pros
Leasing your office space also comes with a few pros and cons attached to it, and they include:
- Free Up Some Working Capital – Your money doesn’t get tied up in real estate, and your business can respond to any new opportunities. You’ll also have more funds available to borrow.
- Prime Rental Space – Shopping around and leasing space gives you the opportunity to get it in a prime area. If your business depends on image and location, leasing is usually more affordable than buying.
- Less Hassle – Properties for lease are typically in good shape, and many of them come furnished with shelving, kiosks or desks. All you have to do is sign the lease, get the keys and set up shop.
Office Space for Lease – Cons
Leasing office space has a few drawbacks that you need to keep in mind. Understanding these drawbacks can help you make an informed decision on whether or not leasing is a good idea for you.
- No Equity – When you lease property, you’re giving money to someone else to fund their retirement or dreams. The money is not contributing to your own investment.
- Costs are Variable – When your lease ends, the property owner is free to raise the rent, and you’ll have to either sign or move out. This makes it difficult to plan for your business expenses.
Contact Cigno Business Solutions Today!
If you’re still not sure whether leasing or buying office space is the best choice for you, reach out today!