Owning a business requires making a lot of big decisions. However, sometimes the choice that should be made between multiple options isn’t quite clear. For many, they may be stuck between choosing to purchase permanent office space and choosing instead to lease it. To help solve that issue, below is an overview of some of the pros and cons.
Pros: Owning Office Space
The major case for purchasing office space is that it can give you complete control over the property for the long term. As the owner, you will not have to conform to the terms of a lease agreement. The real estate in question will be yours. If you do plan on using that office for at least several years, paying a mortgage will also likely be a much better deal than paying for a lease during that time.
Cons: Owning Office Space
First, buying office space usually requires large upfront cost. As a business owner, making that kind investment might be risky. The money might be better spent elsewhere. Second, you won’t have nearly as much flexibility if you own the property. A business can change a lot over the years, and owning such office space may not be a good idea if things change for your company versus where they stand now.
Pros: Leasing Office Space
Leasing has certain benefits. For example, it may allow a company to get a prime location for office space. This can matter if image is important to your company. In the short term, less money will have to be invested in the real estate as well. This will free it up to be spent elsewhere. If you want flexibility, getting out of a lease is also far less complicated than getting out of a mortgage.
Cons: Leasing Office Space
Leasing is not a long term deal. It is true that you will have to do less to manage the physical property. However, that hardly makes up for the money that would be saved if you actually paid off a mortgage. If you want to use the property like you own it for decades anyways, including the ability to make changes to the office, you shouldn’t be paying for the right to use it as a service. You should own it out right.
Overall, owning and leasing office space both have their benefits and drawbacks. Weigh all the important factors and variables. Also make sure to take property insurance into consideration. Don’t rush to a decision. If you make your choice more methodically, or with the assistance of professionals like those at Hartman Income REIT, you’ll probably come up with correct path forward for your company.
I hope you enjoyed this article about the beneficial and detrimental aspects of owning and leasing office space for your business.
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Published by Michael J Schiemer
Owner of Bootstrap Business
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