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Office Space: Lease or Buy?
Posted: Mar 09, 2016
Most of the businesses these days reach an ultimate point in which they are extremely curious as to whether it would be a bit beneficial for them to actually purchase the office space or simply continue to lease the office space. While each and every business is different from each other, there are quite a few factors that are common and should be essentially taken into consideration when you are evaluating whether it is better to buy the space or simple lease it.Office rental can be a very tricky process at some point or the other. Thus it is important to make a proper decision. Pros and cons of leasing are as follows.
1. Cash outlay
On a typical note, if at all you are planning to buy an office, you will be expecting to make a big down payment of around at least 25 %. However, if you are leasing an office space, you will not have to put in so much of money.
2. Opportunity cost
Because of the large outlay of cash that is required to purchase an office space, the opportunity cost of all that money needs to be taken into your consideration essentially.
3. Your fixed and your variable costs
When you are going to buy an office space, you can have a very good idea as to what your cost is going to be like over a period of time. This is very true especially if you have a fixed mortgage for a long period of time.
4. Your growth considerations
The growth phase of all your businesses should be a very major consideration in making a lease and to make the big decision to buy the space. On case your company is relatively new, leasing would anytime be a better option.
5. Management of property
Obviously, you might have heard of the expression that time is your money. If you won an office space, you will also have to manage it to your fullest potential. You can also hire out this function and do it yourself if you want to. Most of the businesses with a very long term of growth plans usually buy an office space. This requires great management of property in order to succeed. You must also appreciate the property space as it is the primary goal that is required to generate a very long term response to your future motives.