- 1 Questions to ask when deciding between renting vs buying office space in NJ
- 2 Pros and cons of leasing an office space
- 3 Pros and cons of buying an office space
Sometimes, there comes a time in your business when you need to move or expand. Many questions may pop into the mind of the business owner. Is it the right time to move? How to find the appropriate space? Also, when you do find the space you think will be great for your new office, do you buy it or just rent it out? Well, before you call commercial movers NJ, you should carefully consider all these questions. In this article, we will talk about the differences, as well as the pros and cons of renting vs buying office space in NJ.
Questions to ask when deciding between renting vs buying office space in NJ
Even though you may be asking many questions right now, there are three most important ones to consider:
- How long you will you be able to stay in the same building?
- How fast are you growing your business?
- What is the local economy like and can it help you decide between renting vs buying office space in NJ?
Thinking carefully about these questions and giving thorough answers will help you get a clear picture of where you are right now, and how can your business improve in the future. Answering them will also point out weaker spots in your business and whether renting or buying an office space will be a better decision for you.
How long can you commit to a building?
The first thing you need to figure out is how long you will need to stay in the new office. This will give great input about whether you should lease or buy. There have been financial studies that show that leasing is better if you are not planning on using an office long-term. This makes sense – you would not want to purchase a property and stay in it only a couple of years.
On the other hand, if you are planning on making the new office space your headquarters, you should definitely buy the property. The point where you move from leasing to buying seems to be around 7 years in many studies, although this differs from one office to the next. When looking at long-term solutions, the difference between leasing and buying can be huge. For example, this analysis says that it costs $300,000 more to lease than buy an office space in the period of 15 years.
Think about the rate your business is changing
How your business is changing is another great factor to consider when moving your business to New Jersey. Simply put, if you are going well, and you are expecting a business boom, it might be for the best to just lease a building. This will give you the flexibility you need to change the office space if there is a rapid growth. However, you should also think about downsizing as well. You do not want to get stuck with more (or less) office space than you need. If your business is perfectly stable, then buying space might be a better solution.
Can your local economy help you decide between help you decide between renting vs buying office space in NJ?
The state of the real estate is in constant fluctuation. There is a great period for investment followed by a slump or overinflation. You should think carefully about it when moving to New Jersey. You do not want to buy a property that will end up costing you more than you anticipated. On the other hand, if the real estate in the area you desire is up-and-coming, you might want to purchase the office space you want.
Pros and cons of leasing an office space
There are quite a handful of pros and cons to both leasing and buying an office space. When it comes to leasing, one of the main draws is the low initial financial commitment. Simply put, there is no down payment, only a deposit. You can also opt out to stop using space when your contract allows – you are not “stuck” with space the same way you will be if you buy it. Lease payments are also tax-deductible, so it can be a great investment.
What also comes with leasing an office space are the landlords. Now, these can be both a good and a bad thing. They will handle repairs and maintenance, so you don’t need to think about it. You can even discuss remodeling with some landlords. However, some might be just too hard to deal with. You will be at their mercy for the timeliness and how the repairs are done. This can be very frustrating for a company that needs good utilities.
The negative side to leasing is that, if you are using a broker, you will have to pay them for as long as you are leasing. Your rent might also increase when you renew your lease. Be careful and remember to discuss these with moving companies NJ has to offer.
Pros and cons of buying an office space
Buying brings its own set of advantages and difficulties. For starters, by buying, you build equity. You can use this later on as collateral in loans. You also have greater control of the space. For example, if you are not using all of the space you have, you can rent it out and earn money from that as well. When it comes to tax, interest payments are tax-deductible, and you can also claim building depreciation. You can also change your building the way you like (in accordance with local ordinances), and finally, you can sell it once you retire.
However, you will need to spend a lot of money from the get-go to purchase the office space. You need to deal with closing fees and real estate. You can also use this money to invest in your business and grow in other ways. There will be no landlord to fix whatever goes wrong – it will all be up to you. Finally, if you outgrow it, you will have to sell the office space and start the whole process all over again.