Small Business Tips – Better to Buy Office Space or Rent?

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Is it better to buy office space or rent? This is a question every small business owner and startup founder has to consider while starting the business. There are a wide variety of pros and cons to both, and you have to make the choice based on your preferred location, real estate market, mortgage payments, future plans, etc.

Let’s a take a look at some of these factors, and you’ll get a better idea of how a new small business can make the decision about buying vs renting an office.

Small Business Tips – Buy or Rent Office Space – Location

Your future plans are flexible. You can get more financing if needed. Most of the factors that you can think of that could impact this decision are flexible. But the one immovable fact is that you need a good location for business. There is no getting around this fact – businesses in good locations are more often successful and a lot more successful than others in remote corners of the city.

So here’s the question that can literally make you a million dollars – Is it possible for you to buy an office in a good location? If yes, then the rest of the factors and your business plan can be adjusted to match the office you plan to buy. Think of it as an investment in real estate rather than office space for your business. The business may be here today and gone tomorrow. But the investment you make in real estate will generate wealth for you for a long time to come.

Small Business Tips – Buy or Rent Office Space – Real Estate Market

Ok, so even if you do want to buy the office space, ask yourself and other real estate experts if it’s the right time for it. Maybe the market is up and it’s a bubble, and it may go down sometime in the future. Wait for the right time to buy. Meanwhile, get office space for rent.

Small Business Tips – Buy or Rent Office Space – Rental vs Mortgage Payments

Another way to look at it is to consider the financial implications of renting vs buying. This is especially important in metropolitan cities where real estate prices are sky-high. For example, the monthly amount you pay to get office space for rent in Bangalore is very small compared to the huge cost of buying the same property. Instead of taking on millions in debt and struggling to pay the monthly mortgage payment, it’s better to pay the more affordable rent until your business becomes big enough.

Small Business Tips – Buy or Rent Office Space – Future Plans

If you buy an office, better make sure that it’s big enough to accommodate your future expansion plans, if any. Otherwise, you’re locking up your future into an office that won’t let you grow or move out – you can’t move out of your own office.

If you can’t afford to buy a big office in a good location that can accommodate growth, then it’s best to rent a space that’s big enough. At the very least, you can simply move out from your current rented space into another one that is big enough.

Indhu Pavul

Indhu Pavul, Masters Degree holder specialized in HR and Marketing. Writing and Training are her forte. She handles sessions for Management and Engineering students. Her grandma is the biggest blessing of her life. Loves to interact and available in twitter @indhushivi.

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