Lease or Buy Office Space – What is Better For Your Business

Starting your own business is worthy of every praise. The decision to stop working for someone else and become your own boss is something that we should all do at one point in our lives. However, it is not easy to start a business and make sure that it pays out in the long run. There are many challenges you must tackle, and one of them is deciding whether you wish to lease or buy office space in Hyderabad.

Many decisive factors will influence this crucial decision, so make sure not to rush anything without thinking it through!

Lease or buy office space – what is better for your business?

There is a set of questions you should ask yourself before deciding whether you wish to lease or buy:

• How big is your business? – If you own a smaller business, leasing might be a better option for the starting period.
• How many employees do you have? – More employees mean more expenses. With that in mind, it could be difficult to finance a purchase.
• Are you planning on expanding in the near future? – Office expansion is a complicated task, I will cover it in more details later.
• How big is your budget? – The financial budget for running a business should be your primary concern. However, you can always turn to banks for an investment or a loan.

There is much more to making this decision, so let’s dive a bit deeper into this topic, and look at all the pros and cons of leasing vs buying office space.

Pros of renting office space

Let’s take a look at the advantages of renting office space.

The financial commitment is lower

As with everything else, your budget is a decisive factor here. Paying monthly rent is much more affordable than paying a mortgage for the office space. There is no down payment. Often, the landlord will request a six-month rent instead, so you end up paying for everything twice a year.

Consequently, you will have more money to run your business, pay your employees, provide office equipment, make sure your business website is working properly, etc.

Access to the high-valued property

If you own a small business, it is virtually impossible to purchase office property on a prime location in the city. However, there is plenty of opportunities to rent one, for a much lower fee.

Caption: Spacious offices in prime locations are often unavailable for purchase, but they can be rented!

Alt: A meeting room in an expensive office building.

Monthly rent payments are tax-deductible

When renting office space, you should know that there is a tax deduction on the monthly rent, since it is treated as a business expense.

Responsibilities and shared payments

When you are signing a contract for a lease on office space, make sure that it covers everyone’s responsibilities. One of the benefits of renting is that the landlord is responsible for maintenance. Furthermore, many landlords will agree to pay some utilities, like waste management.

Move out with ease

If at some point you must move out, it is much easier to do it from a rented space. Once you clear your stuff and pay the last rent, your responsibilities end there.

The cons of renting office space

Now it’s time to look at all the downsides of renting office space.

Additional fees

If you found the property you wish to lease via a broker agency, you will have to pay for the broker fees. Furthermore, every contract signing requires the presence of an attorney, which is an additional expense. However, these expenses are also required if you are purchasing a property.

No equity

When you rent office space, there is no equity build-up that happens over time. You don’t own any percentage of the space, you are just a user.

Rent can go up

Be aware that the landlord may decide, as in most cases, to increment your rent when you wish to extend the contract for more time.

There are many rules

Every landlord has many rules you must follow. Furthermore, all landlords are rich individuals or companies, and they won’t be available whenever you need them. If there are some fixtures around the place that require immediate reaction, you could wait for some time until someone shows up.

Caption: When signing a lease agreement, make sure it contains all the responsibilities of the landlord.

Alt: A person signing a lease agreement.

The pros of buying office space

If you have a higher budget, it is always worth considering to buy office space. With that in mind, let’s look at what are the advantages of owning your own business property!

Rise of the equity value

If you own 100% equity of the property, there is much you can do with it. Since the value always rises over time, you will earn more money if you decide to sell it. Furthermore, you always have the option to rent it to another business and enjoy the monthly rent.

Depreciation of the property

According to law, you can recover the cost you incurred when you bought office space. It comes in the form of an annual tax deduction, called depreciation. However, do not expect that it happens quickly. The usual time frame is between 30 and 40 years.

You set the rules

As opposed to the renting of office space, when you own it there is no landlord to set the rules for you. You can change the office layout, build a coworking space in Hyderabad, and redecorate as you see fit. Nevertheless, be aware that there are some state rules that come in the form of building permits and licenses that you might have to acquire. For specific details, you can always talk to an attorney, or find what you need online.

Caption: Whether you lease or buy office space, it is smart to have a recreational room for employees.

Alt: A recreational room for employees.

Cons of buying office space

While there are many advantages to buying office space, you must be aware of the disadvantages as well.

Financial expenses are huge

Purchasing property requires a large down payment. On the other hand, if you are renting the space, that money could be used for running the business.

Maintenance expenses

If you are the owner of a property, you are responsible for maintenance, insurance, and all renovations.

It is difficult to grow your business

If you start as a small company, and you grow over time, that will require more space. You can either buy a new property or sell the one you own to purchase a larger one. That is a long and tedious process, and it requires a substantial amount of money.

Lease or buy office space – you decide!

If you carefully read this article, you should know all the benefits and downsides of renting vs purchasing office property. Now you must decide what is better for your business, to lease or to buy office space. Good luck in making this decision!

Renting and purchasing office property is a hot topic in today’s business world. Many startup companies are showing up every day while existing companies thrive to expand their business. The commercial real estate market is at its peak, and business owners are trying to make the best purchase. As an employer, you should try to discover what is best for your business, whether to lease or buy office space.

Renting is always a cheaper option, and it is always the best option for startups. It is much more affordable, and it requires fewer responsibilities. Furthermore, you are more flexible about certain things. Nevertheless, renting also has its disadvantages. You must be aware of both before you proceed with signing the lease agreement.

The same applies when buying office space. It is an expensive process but offers fantastic options in the longer run, and it is a better option for more established companies.

There are many other factors that are crucial for picking the best office space for rent in Hyderabad. For example, location, property amenities, accessibility, long term value. Furthermore, the type of business is also a factor when it comes to picking the best office space.

The goal of this article is to cover everything you must know when deciding whether to lease or buy office space. It will include all the pros and cons of renting. Additionally, you will find out everything you need to know when purchasing office space.

Conclusion

Hopefully, at the end of this article, you should have enough information to make an informed decision that will benefit your business. Otherwise, you are risking putting yourself at a financial disadvantage by making the wrong investment. And if that happens, the longevity of your business will be jeopardized. Many companies close due to the wrong steps their owners make, so do not be one of them!