When it comes to getting office space, many business people find it hard to decide whether to lease or buy a property. The need for a new office space can be triggered by business expansion, change of location, or opening a new branch. Whatever the case, the decision you make will be determined by several factors, including your financial status, tastes, and preferences. Each choice, whether buying or leasing, has its benefits and downsides, as discussed below.
Pros and Cons of Buying Office Space
Buying means paying for a property to the seller either using cash or loan proceeds.
- Extra income – you can rent out part of the property and earn additional monthly income.
- Tax deductions – some of the tax deductions you get from owning and operating a commercial property include mortgage interest and property taxes.
- Unwavering costs that result from locking in your commercial mortgage for an extended period.
- Retirement savings – the property’s value can appreciate, and you can sell it later at a higher price to fund your retirement.
- Upfront expenses, including mortgage, maintenance, and appraisal costs.
- No flexibility – if your business expands and the office space becomes insufficient, you will have to sell it.
Pros and Cons of Leasing Office Space
Leasing office space means getting into an agreement with the property owner, which allows you to rent the space and commit yourself to making monthly payments for a stipulated period.
- You have more time to focus on business because repairs, maintenance, and mortgages are taken care of by the lessor.
- Leasing office space allows you to select an ideal location, mainly if your enterprise depends on location and image.
- Flexibility – once the lease agreement is over, you can decide to renew it or relocate.
- No upfront costs – you can grab more opportunities in the market because your money is not tied down by mortgage and other expenses.
- No equity – you will not build any equity on a leased property regardless of how long you use it.
- In some areas, rent payments can be higher than a mortgage.
Choosing between buying and leasing office space is a tough call to make for many investors. Contact Triport today to get all the assistance you require.