To buy or Rent Office Space-Which is Better?

By Jim Osgood
Business owners face an important decision when determining whether the purchase or rental of office space is best.  When making this determination, a number of things need to be taken into consideration in order to make precisely the right choice.

One of the biggest factors to consider is the amount of cash that can be put out up front. Entrepreneurs must usually put out more money in the beginning whenever they are buying office space rather than leasing it. That’s because they must generally pay for appraisals and building inspections in addition to providing a down payment. Since young businesses could be struggling to come up with operating cash, many of them elect to rent office space until they have become better established.

A disadvantage to renting rather than buying is that it is easier to develop a long-term budget when buying. That’s because monthly mortgage payments tend to stay the same over the life of the loan, whereas rental costs can increase from time to time. Rent is typically based on current changes in the market, so the amount of fluctuation in a given area should be considered carefully when choosing whether to rent or buy.

Renting gives business owners greater flexibility when it comes to moving their establishment. Those who purchase office space could find themselves being unable to relocate until they are able to sell their current building. When buying commercial property, it’s important to think about the future needs of a company. That way, business owners can make sure there is ample room for expansion at their current location so that moving the establishment later is less likely to be necessary.

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