Leasing or Buying Office Space: What is the Best Option for Your Business

Office space is a necessity for most businesses these days. The few options that a business has while going for an office space is buying, leasing, sub-leasing etc. There are many factors to consider when you're buying/ leasing office space. And one of the primary ones is, should you lease or should you buy? Both options have advantages and disadvantages based on your particular business situation.

To help you decide which option you want to go with, we have compiled the following questions that you might want to ask yourself.

1. How long do you plan to keep the office space

If you're only planning to keep ii for the short term, we may suggest that leasing is a better option than buying it and trying to resell it when you no longer need it. You'll want to find out if there's a buyout option at the end of the lease if you decide you want to keep the asset after the original lease is over.

2. Is now the right time to buy

If you have made your mind to go ahead and buy an office space, do take some time to think if it is the right time to buy considering the investment that you need to make, the current cash inflow, business needs etc. Also downturns in the market are the best time to buy properties, but for many businesses hoping to work in areas already in high demand, finding an affordable property can be difficult.

3. What is your plan in the next few years

This is an important factor to consider while buying/ renting an office space. This could drastically affect your spatial requirements, business productivity, return on investments. If you are planning to scale up in few upcoming years then renting would be a better option.

4. What would be more profiting: investing in capital or investing in office property

This is business question; where should you put your money to get the maximum gains. If you can see greater profits from investing capital into your business then you might want to go ahead with leasing an office space. On the contrary if you feel like a permanent office space will be more profitable in terms of stability, employee satisfaction, and brand value then you should buy a property.

5. What are financial options for purchasing vs. Leasing

Purchasing tends to require a higher monetary power initially in addition to having to finance your purchase through a lender. Depending on your situation, this may not be a viable option if you don't have a considerable amount of money reserves. Leasing generally requires less cash down, and the monthly payments are often smaller.

6. What are the tax benefits of buying vs. leasing

It's critical that you consider all tax related clauses for both buying/ renting as they relate to your particular business situation. There's usually a tax benefit associated with leasing where you get to deduct the full lease payment immediately. Leasing and buying both offer advantages to companies. The key to making the right decision is understanding exactly what your company's needs are and the purpose of the asset