1 common issue that lots of small companies face is whether to purchase or rent office space. If you’re facing this option, it’s important to think about many different factors that go into purchasing or renting a house. In this article, we’ll learn more about different explanations for why experts think buying a house is far better than renting.
Here are the 25 hints why a small company should buy a property instead of rent:
1. You Will Have a Location with no Must-Move Clause
Charles Read, President/CEO, GetPayroll & Simon
If you buy your property, you will have a more secure and permanent place for your business which can’t ever be leased out from underneath you with a must-move clause. This removes any worry you may have about where to move to next every time the term of this lease ends.
2. Property Ownership is a Long-Term Investment
Ty McLaughlin, CFO, OnceLogix
Owning a property is a long-term investment, even while renting is a short-term fix. If you’ve got a good capital and your long term plans for your company involve employing the exact same business property, then buying is the better choice. Purchasing your own property is a long-term investment that will pay for itself in time.
To find out more, read our article on buy or lease office real estate.
3. You Can Take Advantage of Cost Segregation Depreciation
Andy Kahn, Shareholder, Concannon Miller
1 advantage of having a home as a small business owner is you might have the ability to take advantage of a tax plan referred to as”price segregation depreciation.” If you’ve purchased or constructed a home and paid more than $1 million over the last 15 decades, your company could reap the benefits of the tax savings generated by a cost segregation study.
4. You Can Sell it as Part of 1031 Tax-Deferred Exchange
Stephen Davis, President & CEO, Safe Harbor Asset Management
As a company proprietor, you may qualify for a Section 1031 deferral. The 1031 property exchange allows real estate investors to defer capital gains taxes on appreciated property to a later date or possibly indefinitely. It’s ideal to seek the support of an asset manager when you do so strategy through your retirement years to enjoy tax-deferment on the sale of your property.
Read our final guide on the section 1031 like-kind exchange to find out more.
5. You are able to Lease Out Some of the Property & Earn Rental Revenue
Kathleen Metz, VP Business Lending, Affinity Federal Credit Union
If you understand you will remain in the location, purchasing the property may be a good investment. This is particularly beneficial in case you won’t want the entire building since you can rent out a percentage, making rental income. You can use the income from the lease to help cover your mortgage.
6. You Can Design the Home as You Please
Nicholas Bowman, Owner & Real Estate Broker, House Calls Realty
One of the major advantages of buying a property for the company is that you’ve got full control over the house. You’ve got the power to decide what needs to be done in terms of designing the property according to your business’s requirements and won’t need the landlord’s acceptance for this.
7. You Can Build Equity in Your Property
Kevin Vandenboss, Broker, Vandenboss Commercial
One of the main benefits of purchasing real estate to your small business is that you can build equity in a house that you afterwards leverage for growth. In case you have equity in real estate, then it’s easier for your business to acquire loans, which you will eventually need as you grow.
8. You Can Keep Your Prices Frozen
Evan Roberts, Real Estate Agent, Baltimore We Buy Houses
Purchasing a property instead of leasing is a great way to keep your costs fixed. Many businesses will maintain a long-term rental of 10 to 15 years on their construction, but in the mercy of their landlord as to the terms of their next rental. Normally, the lease will also grow after a few years, and this increase in price is something that you cannot control — unless you possess the property.
9. You Are Paying for Something You Actually Own
Jo A. Steinberg, CEO, MidlandHealth.com
When you purchase your own commercial property, you are paying the mortgage for a property that you really own. Unlike when you are renting, you’re paying the lease but the property won’t ever be yours. Obviously, it’s far better to pay for something that will eventually be yours.
10. Buying a Property May Give You Tax Savings
Dale Schaechterle, Broker & Owner, Realty Executives Integrity
As business owners, writing off costs and depreciation as your house increases in value over time is a massive advantage. However, unlike renting, the money that you use to purchase your facility is not deductible, but you are permitted to recover this over time during annual depreciation deductions.
11. Your Mortgage Will Probably Be Lower Than Your Lease
Casey Thomas, Co-Founder and Owner, Creative Soul Music School
In case you have the cash for a downpayment on a commercial real estate loan, and also if you’re planning to remain in precisely the same location throughout your company’s lifetime, then purchasing a home is a great idea. Often, your mortgage will most likely be much lower than what your lease would cost you — and you get to get the property you are paying for.
To learn more, read our article about the best commercial property loan providers.
12. You May Find a Fantastic Property That’s Undervalued
Brandon Wheeler, Owner, Gulf Beach Weddings
If you’ve located a fantastic property that’s available at a low price, and if you believe it would meet your company’s space requirements, it’s best to catch the chance and purchase it. You will need to devote some money for fixing the property, but it is going to turn into a valuable business asset which you can use to your own benefit in the future.
13. You Can Benefit from Cost Appreciation
Craig Melby, Founder, LeaseSmart.com
In case you have a stable business and you won’t be expanding or relocating, then having a home is great because you’ll gain from the growth in property value. In the end, most property properties enjoy over time. This may be a big benefit if you make the decision to sell your house by the time you retire.
14. You May Put Money into Energy-Efficient Upgrades
Shauna Sloan, Founder, Kid to Kid Franchise System, Inc..
If you own the property, it’s simpler to put money into energy-efficient upgrades which will assist your organization. As an example, you can insulate the construction, upgrade to energy efficient lights and HVAC system, and solar panels to help lower your energy cost. These upgrades are not something you can easily do if you’re just leasing.
15. You Don’t Have to Deal With Landlord Restrictions
Amy Baxter, Founder & CEO, MMJ Labs Pain Relief
Among the perks of owning your company’s property is that you have the flexibility to perform your business without needing to take care of the landlord’s limitations. You can use as much parking space as you want, play music, throw corporate celebrations, stay late, or even work on weekends and holidays without needing to ask for your landlord’s permission.
16. You Can Maintain Your Customers
Mr. Stacey A. Giulianti, President & Owner, Lauderdale Comics
If your business has been seen by clients frequently, you wish to keep the place so you might also retain your clients. Once customers get used to coming into your store, you want them to know you are not going anyplace. Being in the same neighborhood, with the exact same parking, exactly the same business hours, keeps our customers coming back because it is likely to become a part of their”routine”.
17. Lowers Expenses Over Time
Stephen Funrai, CEO, Law Business Suites
Purchasing a building for a business can keep property investment lower over time, and it may provide an additional asset for the company owners to sell down the road. For small business and its owners, the choice of whether to buy or lease is simply an issue of ROI. If the business can attain a higher ROI by reinvesting in the company instead of buying a property, then serious consideration ought to be given to leasing.
18. You won’t Feel Bad buying Great Furniture
Robbie Nevens, Designer, LampTwist
When you just rent a home, it is a lot easier to put off buying good furniture since the area is not yours. So you’ll probably settle for cheap furniture that you don’t really want. But if you own the property, you will be motivated to decorate your location and won’t feel bad investing in quality furniture that will aesthetically match your style and also the distance.
19. You Wish to Set up Your Brand
 Stephen Haugse, President, Elle Mer’s Maui Bikini Factory
If you want to establish your brand and build an empire, it’s best to purchase your property for your company. When you own the home, you won’t have to deal with landlords who wish to hold more power and control over your enterprise. Also, individuals will understand your brand more centered on your area and location.
20. The Land Under the Real Estate Can Appreciate
Staff Writer, Office & HR, Biz Filings
According to BizFilings, it’s better to own the property in case your place is in a place where you think property values will continue to increase. If you have a home in this region, you’ll find the advantage of this appreciation in the event you ever sell. But should you rent it, it’s likely that the rental will continue grow significantly when the property value rises.
21. You Can Proceed When You Wish
Staff Writer, Premise and Home, Business Getaway
Some business owners think that if you own a home, you won’t have the flexibility to move when you wish to. However, in accordance with Business Gateway, owning a property actually provides you with more flexibility because you won’t be tied into a fixed-term contract. You may choose to sell the property or lease it out if you choose to move to a different location.
22. You Can Take Tax Deductions on Associated Prices
Zeynep Ilgaz, Guest Writer, Entrepreneur
According to Entrepreneur, you won’t receive a tax-deductible lease expense should you own your property. However, you’ll continue to be able to enjoy tax deductions from the associated costs of buying your own business space, such as mortgage interest and property taxation.
23. If You Need to Make Significant Improvement on the Construction
Staff Writer, Money & Finance, BDC
If you believe you want to invest heavily in a construction and make significant improvements to run your business, BDC indicates that it makes more sense to get a property rather than renting one. Most landlords will not spend to improve the building according to your requirements. The renovation is generally at your expense. In cases like this, it’s ideal to invest to the renovation of a building that you own.
24. It’s Easier to Plan For the Future
Staff Writer, Small Business, Realcommercial.com.au
There are just two reasons why owning your small business property makes it easier for you to plan for your future. To begin with, according to RealCommercial.com.au, it is simpler to have long-term aims because you understand your monthly costs, which may greatly influence your financials. Secondly, you’ll have more time to conquer the marketplace because you know that you may remain in the identical area longer.
25. You Can Build Business Credit & Own an Asset
If you buy a commercial property via a real estate mortgage, then you’ll enjoy the advantage of building your business charge while possessing an advantage in the exact same moment. Both company credit and company asset will be helpful when you are going to need to have a business loan in the future to finance your business’s growth and growth.
Read our article to discover more about how business credit scores work.
Bottom Line — Purchase or Rent Office
When deciding to buy or hire office, owning your own property to the company can be very advantageous, particularly if you’ve got the money to pay for the required deposit. There are a lot of reasons why you need to buy your own small business property. If you are still choosing between purchasing or leasing, check out the best 25 expert tips on buy or rent office.
