Buying owner occupied office space can be a great investment for some however for others it just does not make sense. Below are a few reasons why you should not purchase your office space.
Your business is not stable – I don’t mean financially but from your space needs. You need to consider commercial real estate that will accommodate your current and future business needs. Many companies have made the mistake of buying a building & spending a ton of money on improvements only to quickly find out they need more space and end up having to buy or lease office space elsewhere. You want to make sure you have enough space to occupy for at least 5 years (10 years is better) to ensure enough time for appreciation, etc. If you think you will experience growth soon and need to hire more people you might consider leasing until your business is more stable.
You need money to fund your growth – If your business is experiencing a lot of growth it might make more sense to invest in your company rather than tie up $200,000 into a real estate investment. Commercial real estate is not liquid. If you end up in a situation where you need access to money quickly you better hope you can sell your office space sooner than later.
Owning office space costs more than you think – Too many people make the mistake of thinking buying is cheaper than leasing. In some cases it might be, however there are more costs to consider than you think. You not only have to consider the cost to purchase, but also the cost of any improvements, closing costs, loan points, taxes, insurance, utilities, maintenance, hoa dues, janitorial, etc. Before you buy make sure you consider all your monthly costs of owning and compare it to leasing office space.