Office Space: Buying vs. Leasing

To buy office space or to lease is the question that troubles many small time entrepreneurs. Both have pros and cons, which has to be considered at length, as each business situation demands a different solution. Here are some points that may help you in deciding whether to lease or buy.

Advantages of Buying Office Space

One of the best things about buying a property is that you can cut down on your mortgage, which is the killer expense for any business enterprise. When you own a property you can even get tax deductions in the form of mortgage interest etc. Another plus point to owning a property is that as times goes by, the value of a property keeps appreciating and it can double as retirement fund. Also, when you own a property, you can sometimes lease it out as an additional source of income. 

Disadvantages of Owning Office Space

Well, no deal is without its shares of cons. A fixed place, no mortgage and a side income can be alluring, but lack of flexibility, especially for a growing business, may tilt the weight for you. Another major disadvantage in buying a property is the down payment that you have to make. 

Pros of Leasing a Property

A start up company needs all the money it can lay its hands on for the business. When you lease a property, you can thankfully forget about investing huge sum as capital for the office space. Again when you lease a property, you need not divide your time between running the company and maintaining the property. But, here’s the best part: when you lease a property, it gives you the option to change when the need arises.

Cons of Leasing a Property

When leasing you don’t have to think about the capital, but there are other variables involved like annual rent, which may increase any time without warning. At the end of the day when you lease, you are helping someone else save for his rainy day.

When you have gone through in detail your options, sit with your financial advisor, and a real estate agent to help you decide further. Deciding for one over the other is not a black and white issue. But, think about your cash flow, which should be a good indicator for you. Consider points like how long you need the property for use, the location of the property, the maintenance details of the available space etc before zeroing in on your decision.