Luxury Business Space – To Buy or Lease

Owning a luxury business space can be a very rewarding experience for any company. Aside from that, it can sometimes be a good investment too. However, purchasing one can also be filled with unexpected drawbacks that can bring problems and can cost the owner to a great extent. For many businesses, the prospect of purchasing a luxury business space is a solution to help solve logistical and organizational problems and issues. However, what does a business need to consider before they choose to purchase a luxury business space?

Firstly, the business needs to consider its stability. A business must not only be stable financially, but also from the aspect of occupancy. A good financial standing is normally required to be able to qualify for a loan applications to purchase a building intended for business purposes. However, a company should also take into consideration on how the new space will work for their business in the long run. This is essential as some businesses simply purchase buildings, paying out tons of dollars, and consuming a lot of time to furnish out the place to suit the needs of the business, only to find out that the business has rapidly outgrown the space and has to search for another solution.

Next, is there a willingness from he business owner to put their personals asset at risk? Many business owners perceive that they just can purchase a luxury business space to house their business simply based on the solid strength that their company possess. While this can be applicable to huge firms, small or medium-sized businesses are often required by most banks to guarantee their loans with some of their personal assets.

Finally, a company should distinguish the cost differences between purchasing and leasing. It’s a bit surprising to know that some people who purchased their own buildings or spaces have never done an extensive cost comparison between these two terms. They just simply dive into the solution of buying due to business needs and to address time constraints. When purchasing, the price of the space must not only be considered, but also the expenses of improvements, loan points and closing expenses, and other continuing expenses like insurance, taxes, utilities, maintenance, association dues, etc. Also, the opportunity deficit of the down payment if it was alternatively invested must be included.

The owner ought to organize the information in a model for comparison against a luxury business space that’s available for lease. More often, the all-in expenses of owning is somehow greater on a monthly basis as compared to a leased space. In addition, outweigh the expenses with the tax savings, structure devaluation and potential asset appreciation.

Overall, whilst buying a luxury business space can help solve many issues for a business in terms of organization and logistics, buying and owning an office can be an expensive business. Unless a business owner is planning to keep the business for a long time, such as 5 to 10 years or more, or unless the appreciation is uncontrollable, the overall cost of owning is likely greater in the long run and leasing could be a suitable alternative to buying a plot.