Should you purchase an office space for sale?
Let's look at the Pros and Cons.
Congrats! Your business is growing; you're probably looking to move into new shiny offices to accommodate growth. Real estate has typically been a sound investment so you're considering buying an office to house your operations. You go out there and find commercial real estate for sale. Before pulling the trigger, you decide to weigh your options, consider the alternatives, and compare.
You've heard countless times that buying your own house will give you peace of mind and you will always have a roof over your head. "Rent money is making your landlord rich and not you." Right? Does this same principle apply to commercial real estate? It does, and it doesn't. There is a big difference between what you may be looking for in where you live and where you work. Mainly, you may want to buy a home where your family will grow. The very dynamic nature of business implies ever-changing needs. Future uncertainties, growth or downsizing, relocation, etc., should be taken into consideration.
Weighing the pros and cons of buying and leasing office space will allow us to compare both options.
Pros of Buying Office Space
- Tax deductions: Interest payments, property taxes and other costs can provide deductions.
- Fixed costs: (Hint: this one also goes in Cons) By locking in a long-term mortgage or purchasing with cash, your business will know what its office costs will be for the foreseeable future.
- Liquidity: It's your office; you can sell it or rent it out if ever in need of cash or for a comfortable retirement.
- Commercial office space for sale can quickly appreciate in value with economic booms.
Cons of opting for Offices for sale
- High upfront costs: Besides putting down a hefty down payment, keep in mind appraisals, closing costs, improvements and other unforeseen expenses when buying an office and moving in.
- It's the least flexible option. When buying an office, take into consideration all costs associated with the purchase and subsequent sale if the office you bought no longer suits your needs. Keep in mind it may take six to twelve months to find a buyer and have access to your cash.
- Fixed costs: Whether you hire or fire you will still be tied to the office you purchased with all its costs.
- Lack of creativity: You own a successful business. Is burying a pile of cash into commercial real estate the best use of your profits? Consider reinvesting in your business' growth. Invest in new lines of business or a new business altogether. Buying an office may be the "easy way out" but you can probably expect around 5% return on your investment. How much are your business' expected returns?
Let's take our premise a step further
Our main concern with buying an office is the upfront costs and lack of flexibility. From our analysis, we've found that renting office space provides greater flexibility and lower upfront costs than opting for owning your place of work.
You may be surprised to find that there's an option that is more flexible, requires less upfront cost and is even cheaper than renting. That's where Executive Office Suites and OfficeList come in.
So there you have it. You have three, not two options, to house your business. Based on your specific needs and your business profile, you may choose between buying an office, renting one or opting for a serviced executive office.
OfficeList has been helping small companies and entrepreneurs find flexible full service office space for over 10 years. We have partnered with more than 2000 executive office suite operators throughout the US and Canada and help our clients find the right solution at the best, unpublished prices. All this we do at no cost to the client since the office space providers pay us a success fee from bringing them business.
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