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What Are the Advantages of Buying Office Space?

The advantages to buying office space are all reflected in your income. The following are examples of these advantages:

  • Additional income - If you purchase more office space than you need, you can rent out the additional space resulting in additional income.
  • Fixed expenses - By choosing to obtain a long-term commercial mortgage, you can know every month what you can expect to pay.
  • Retirement Financing - Because property generally appreciates in value over time, when you're ready to sell, income will be generated towards your retirement.
  • Tax Deductions - As a business and property owner, you can deduct the mortgage interest as well as the property tax and any other related costs from your annual returns.

What Are the Disadvantages of Buying Office Space?

  • Initial Costs - There are initial costs you must cover upon the purchase of the property such as the costs of appraising the property, non-regular maintenance required, and, of course, your down payment. However, these expenses are one-time only if you can get past them.
  • Minimal Flexibility - Just like additional space can give you additional income, lack of space can hinder your income base, forcing you to sell and find new accommodating space.

What Are the Advantages to Leasing Office Space?

  • Make Available Working Assets - Flexibility with spending because the money is not locked up long term. You can also gain access to funds from lenders easier.
  • Prime Property - This option is more affordable if you operate a business which depends on both location and appearance for success. Plus, the space is easier to find because much of this type of space is already owned and ready for lease.
  • Ample Time - Through a lease, you will have more time to focus on the operation of the business.

What Are the Disadvantages to Leasing Office Space?

  • No Building Equity - Even though you won't have to manage the property per se, you will also not be helping yourself long term as far as retirement is concerned. You will actually be helping fund your property manager's retirement instead.
  • Unpredictable Expenses - Because leases expire, and rent control is not usually in place for commercial property, you might experience rent hikes and higher related costs.

Should I Consult a Lawyer about my Business and Commercial Law Issue?

Starting, selling or buying a business will require a great deal of time and effort. A lawyer can help you organize your financial information, determine the licenses appropriate for your business, and contact all the official parties before the required deadlines. An attorney can also assist you with Contract Drafting and Review so that your best interests are met. Additionally, a lawyer can help you determine the business management structure that would be most lucrative for your endeavor, and limit your potential personal liability.

Photo of page author Ken LaMance

, LegalMatch Law Library Managing Editor and Attorney at Law

Last Modified: 12-30-2013 02:44 PM PST

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