Buying and leasing office space offer different advantages – bizjournals:

Buying a property represents amuch longer-term financial commitment than leasing and, as such, requires a realistic assessmenf by the potential purchaser of the company’s future Companies anticipating significant growth need to decidwe whether to purchase property that is largre enough to accommodate growth and whether they can lease unused space until it’s needed. The potential rentao income that leasing unused space could generatee should be takeninto consideration. Space is less of an issuee when leasing anoffice since, if it becomee too small the company has the option of not renewinv its lease.
That flexibility also can be useful if market changes show that a move to a different locatiojn wouldbe advantageous. On the other hand, renters can be faced with unwelcomed disruption should the landlor decide to terminatethe lease. Purchasing required more cash up front than The initial outlay when purchasing includes a substantiao down payment as well as the cost of inspectionzand appraisals, loan-related fees and othed closing costs. The upside is in contrast with a firm thatleasee space, the purchaser will own an asset that can be sold hopefully at a profit.
According to online office space referral and informationb networkOfficeFinder LLC, business ownersx purchasing office space can expect to make a down payment betweenb 10 percent and 25 percent of the purchaser price. By comparison, the up front cost involverd in leasing a space usually is limitecd to just acouple months’ rent. Another factor potential buyers should consider is the effecy of the down payment on working capitall available to financethe company’s growth.
A number of othe issues should factor into the buying or leasing suchas taxes, maintenance costs and potentiak interest and rental rate Renters, for example, usually don’t have to worry abougt regular maintenance costs, which are normallyt the responsibility of the property However, should they wish to make significant alteration to the leased space, they can do so only with the landlord’x consent. Property owners, on the othe r hand, are free to make whatevedr changesthey wish. Purchasers also have the advantage of knowinh in advance what their future monthly loan paymentsswill be, especially when they have a fixed-rate loan.
on the other hand, are likelg to face regular increases in rental rates and need tobudgeyt accordingly. Leasing initially may look like thecheaped option, said Tim Hatlestad, presidentt of the Certified Commercial Investmen Member Institute, but to help reach a business owners should carry out an after-tadx analysis to determine what can be written off, as renting and buying offer different “If everything else were then you have to look at the optionzs after taxes,” Hatlestad said. “The after-tax through a number of measures, will tell you what coste less.
” Property owners, for are eligible for deductions of property mortgage interestand depreciation, whils those who lease office space usually can deduct the full amountr of the rent as a businesds expense. Jim Osgood, CEO of said the stage a business is in can be an importanty factor in determining whether to buy or A more established business should conside buyingoffice space, he since anticipated growth is easiere to predict accurately. A startup, on the other hand, would probably be better to leasean office, as it wouldc provide greater flexibility and fewer constraints to growth.
“I don’t know if it’s a good idea for a startup to purchasee real estatebecause there’s a lot of uncertainty abouft whether the business will be truly successful or not,” Osgoodx said. Osgood said business owners should look at three possiblescenarioas — optimistic, realistic and pessimistic — that pit anticipated propertty appreciation against cost factors to help them reach a
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