You have yourself a business. You have been running it from your house and for the last couple of years, it’s been doing well. Your business is at the point of needing more space and more people to help out.
You know it’s time to get yourself your own space. The problem is you’re not sure if you should rent or buy? There are some things that you need to consider when making this big decision.
What is your cash flow like? What are your future projected expenses?
Advantage of Renting
Renting helps you get rid of responsibilities. If there’s something broken on the premises, the alarms don’t work or the toilet is blocked, then it’s not your job to fix it. Passing on the job to the property maintenance company means that you don’t need to worry about paying or organising any of the maintenance.
Renting also removes the need of having to have a large sum of money upfront, before you can even think about moving in. If you’re a new company, it could be unlikely that you would have that much money lying around.
Disadvantage of Renting
The problem with renting is that you’re at mercy of the landlord. This means that they may not want you to renew your lease and you would have to find somewhere else to go. Or each time the contract is up the price increases.
Renting also means that your money is not going anywhere. You’re not putting money into equity, getting any return on your money.
Also, if you don’t own the building it can be tough to do what you want to it. Do you want to knock a wall down? That decision is up to the landlord and not you.
Advantage of Buying
Buying your own office space means that your money is going towards something. Year on year, property values typically go up, so if you own your office space you have the means to sell up and get a large sum of money back.
As mentioned before, owning your property means that you can do to it as you wish. Want to paint the walls pink and install a hot tub in the canteen, feel free!
Disadvantage of Buying
If you’re looking to buy somewhere then you would need a 10-20% deposit for a mortgage and that might not be something that you have.
Similar to some occasions when buying a house yourself, the whole buying process can take weeks. So if you’re looking to move into somewhere fast, then it’s unlikely you will.
Also, if you own the property, the burden of maintaining it, the upkeep, and any repairs fall on you or you’ll have to get a company to do it. And that comes at a cost.
Thinking long and hard about your business is required before you look at renting or buying. If you do decide to buy, then look at the official 1st UK Money site for mortgage advice, especially for those with bad credit.