Having your own business is certainly an overwhelming occupation. One of the biggest pluses and minuses at the same time is that you are solely responsible for making decisions and standing by them for better or for worse. One of those decisions surely is whether an office space should be built or leased. Both options have their pros and cons and they will be discussed here in detail, all in order to make it easier for you to make a better choice.
Check rules and regulations
Both owning and renting an office comes with their share of rules and regulations. Make sure you are freshly informed about all of them since they tend to change and they may be of significant influence in making your decision right. Also, compare GST credits that you can claim as the owner of your business property with those that can be claimed if you are renting one. Sometimes the difference between them is a good reason to go either way.
How your company will develop in the future is a significant element that needs to be strongly considered. If your plans are to expand significantly and you cannot fully predict the scope of the expansion, leasing would be a better option for the time being. Once you reach the volume that is not going to rise dramatically in the near future you can again consider building an office. It would surely be a bad investment to build an office that fails to meet your requirements in only a year or two.
Getting the loan under favorable conditions is always a good precondition for investments. If you are able to obtain a fixed rate loan, and it is favorable to the rent price you will be paying to lease a similar office, give building an office a serious positive thought. Leases tend to have a clause that includes an annual increase. These clauses are related to Consumer Price Index and may increase your rent every time the lease expires.
If the initial investment is your biggest concern, renting an office is surely a better choice. Being a tenant means that the only thing you really need to thing about is your monthly lease rate. Building an office means substantial initial investment. Even if it does come with unexpected expenses, which it rarely does, the licenses and taxes required will solely take substantial funds even before you start actually building the office.
Starting from scratch?
If, all things considered, you decide that building an office is the right path for you, buying a teardown property is often a better solution than buying a piece of land and starting from scratch. First off all, they are easily turned into a suitable building location. Next, even though they are in a decrepit state, a lot of material can be used when a new building starts to be made. Lastly, you will need fewer permits and pay fewer taxes when you turn an old place into a new one than starting from scratch, which will save you a lot of time and money, as well.
As you can see, both leasing and building and offices have their downsides and upsides. The most important decision factor is knowing what your limits are and how your company is going to develop. Bearing this in mind and comparing lease and loan rate will make your decision easier.