If you are not going to work out of your home, you will have two options in acquiring office space: lease it or purchase it. The lease vs. purchase decision is not as hard as most people think. Leasing office space has advantages and disadvantages and so does buying office space.
Leasing Office Space
Advantages- Smaller up-front cash outlay
- Short lead-time to take possession and move in
- Monthly/annual expenditures are known in advance
- Can negotiate maintenance and repair functions
- Expansion and modifications could be negotiated and financed by the landlord
- If more (or less) space is needed, you can walk away from the office space at the end of the lease term and relocate to more suitable facilities
- May be able to sub-lease excess space to other tenants
- Never builds up equity
- Expansion and modifications can be limited by the landlord
- Too long of a lease period can lock you into an office that no longer serves your purpose
- Excess space sits empty while you pay the monthly rent for it
Purchasing Office Space
Advantages- Can increase in value and build equity for the company
- Expansion and modifications to the building are only limited by zoning ordinances and your budget
- Excess space can be leased to other businesses to generate income
- Large up-front cash outlay
- Longer lead-time to move in due to real estate closing procedures
- Responsible for all maintenance and repairs
- If cash is an issue, a quick sale of the property may not be possible
