Rent or Buy?
If you don’t already work in an office, you may change your mind as your business grows or as you find working at home too distracting. The next decision is whether to rent or buy. Here are some factors to consider as you decide.
1) Do you value having fixed costs? If you purchase property, you may have a mortgage, but you know exactly how much you’ll be paying every month. With a lease, you may be subjected to annual rent increases.
2) Do you see this decision as an investment? If you purchase property in a prime location, hopefully, the value will appreciate, and you‘ll be able to sell the property at a profit. In a rental, you lose any money that you spend.
3) Can you cover a down payment? Buying requires an initial outlay of a lot of money, which you may not have. Renting does not require as large an initial outlay, which will free up your capital so that you can more easily respond to market changes.
4) How quickly is your business changing? When you purchase, you lose the flexibility to change space and location as your business grows (although you can still rent out the old office and put the income towards renting a new one).
5) How busy are you? Property ownership gives you the additional duties of building maintenance, security and management, responsibilities which would fall on the landlord in a rental.
Comments
You can't be serious with this "tip".
1-What about property tax increases. Do you know of any town or city in the US where taxes decrease or even stay the same?
2-What happens if you purchase property and there is a decrease in the home's value? Do the math: even if your house does not lose value from the time you purchase it to the time you sell add the following: (1) mortgage interest, (2)additional homeowner's insurance,(3) yearly maintenence costs, (4) transfer taxes when you sell, (5) property taxes, (6) additional utility costs (i.e. sewer tax), and let's not forget (7) the 6-7% of the sale price when you sell.
Take the downpayment (and yearly costs-see above for just a few) and invest in a conservative mutual fund (or even a high paying money market account) and you will probably come out WAY ahead, especially during times of irrational exuberance.