Buy or rent? It’s the age old question. And I am talking renting or buying commercial property or office space for your own use, not as an investment to rent out to others. Both paths have their advantages and disadvantages, the major ones being; you will tie capital up if you purchase your commercial property or office and you are open to fall prey to a falling market. And, if you rent you release money for your cash flow (particularly if you rent a Serviced office which negates the need for certain staff members) but you may miss out on a rising market.
Consider, buying a commercial property for your own use usually requires a minimum of 25% deposit. And I say minimum because commercial mortgages are getting harder and harder to obtain, many of them demanding deposits closer to the 50% mark. Combine this withy the current interest rates and your monthly payments will be lower, but not appreciably so, than the monthly rent on a similar property. So – if the market for commercial property has remained stagnant or, worse, gone down, then you have tied up a substantial amount of cash for no apparent gain. However – if the market has grown then you will have realised a profit on a very sound investment.
But, we also have to take into account the use of serviced offices. Here we have numerous variables that effect the end value of the investment. Namely – we negate the use for a receptionist and a reception area as this is shared withy the other clients. Other non-essential office space is also shared such as board rooms, kitchens, waiting rooms etc. And, although you are charged for this it is at a fraction of the cost of what it would be if you were the sole user.
So – food for thought. Take a close study of what you are looking for in commercial space before taking any major, lasting decisions.
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