There are various pros and cons for owning vs. renting an office space. All growing small business owners end up asking themselves which option is better eventually. If you’re a small business owner, you’ll need to weigh various circumstances before deciding which one’s the right one for you.
Owning Office Space
By definition, owning anything means being the ruler of your own domain, that is, your office space.
The first benefit to owning your space is fixed costs. With your own office space, you can lock in your commercial mortgage. In the long-term, owning space will give your business clear-cut and fixed costs.
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Not to mention, if you have extra space, you can rent it out. Renting will add another source of income for your business.
And, owning office space may give you tax deductions. The associated costs of owning and running an office space can provide you deductions in property taxes, mortgage interest, and several others.
Unfortunately, nothing is without faults. First off, there’s a lack of flexibility with buying office space. Although it may be beneficial when you buy it, your company may outgrow the office space you buy in the future. You may need to sell the office space to acquire a larger office, making the original investment moot.
Also, buying office space will cost more upfront. You have to pay attention to various costs, including property, appraisal, and maintenance costs. Not to mention, there’s probably a sizeable down payment along with any future property improvement costs.
With owning, you may need to dip your hands into the property management business. And if you buy an office space, but future situations call for moving to a better or more spacious location, it may turn your previous investments useless. However, you’ll have fixed costs, and if you have extra space, you can rent it out to get some returns.
Leasing Office Space
Leasing property lets you choose an optimal location in a good area with a high image. If your business depends on location and image, leasing makes it a more affordable option.
Not to mention, since you won’t be worrying about real estate, you can better respond to market opportunities. And, since you didn’t buy your own office space, it’s better to borrow funds for other things.
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Owning anything means taking on responsibilities associated with ownership. That can take up time away from your business, so leasing lets you focus more on your actual company matters.
Of course, as with leasing or renting, you’ll be subject to annual rent increases or higher costs when your lease ends. Not to mention, the money you’re putting towards the lease isn’t coming back to you. If anything, you’re funding someone else’s retirement fund instead of yours.
With leasing, you’ll have to acknowledge that the rent money isn’t coming back to you. Not to mention, the rent, lease, or prices, in general, will increase annually. However, you’ll have more flexibility, allowing you to move if necessary or respond to market changes.
Making that Decision
There isn’t really a straightforward, absolute answer or solution for this question. It’s all dependent on your company’s specific financial, tax, and personal issues. If you do decide on leasing in the Katy area, you should consider calling Titan Business Suites to check out our private offices. But before you make the final decision, you should consult your accountant and financial planner for advice on owning vs. renting an office space.