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Updated almost 2 years ago,

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Ash Ahuja
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Commerical purchase for IT office and rental

Ash Ahuja
Posted

All,

I am a homeowner from last 9 years but no investment properties.
After making some good success in IT Consulting business, I need to expand and need to hire some employees.
So basically I cannot operate from home now. I was thinking of leasing some office space. But I got an idea why not to purchase?

Need your assistance and input.To be specific I live in Northern VA and here company is registered as Foreign LLC(cos initially it was started in NH but I moved from there):

Reason for purchase rather than leasing:
1) Capital expenditure can get deprecation (possibly in 27.5 years if I understood correctly).
2) I have enough cash in the business to buy the property 5 times bigger than I need. And rest space I can divide and rent it out. So it cannot only reduce my taxes by capital expenditure but may also generate some cash flow from rental

I understand:
1) There will be property tax (Expense)
2) Maintenance (Expense) and some headache

3) Insurance (Expense) and possibly HOA



Questions:
If I have to sell let's say in 10 years from now how does it work?
If the property appreciates and profits -how does that work?
How is the commercial market in general? With still offices not properly opening- what are the chances that Office property prices will go up?

Is my understanding correct that the deprecation aspect is worth it? 

Is there a chart where I can plugin all the numbers and see cost/profit/expenses and all details?
Appreciate your input and guidance!

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