For those of you who are small business owners, do you own or rent the office you house your business?

Question

For those of you are self employed or small business owners / self-employed. Do you

1) Primarily work out of your home office without having to pay rent.

2) Rent an office space near your primary residence

3) Own the office building / condo where you house your business.

4) Own a residential condominium where you operate my business5) Other, I operate my small business at "XXXXX"

For those who have selected #3, Are you happy with your decision of owning your commercial property and would you recommend it to others? Do you also rent out part of your office building to other business tenants?

Sylvia B. · Answer

We own our building. We bought an old church building on the main road through town.

And remodeled it inside and out.

We are very happy to own our building and do not share it with anyone. We took out a mortgage with our local bank for about half of the cost of the purchase and rehab and paid it off in less than 2 years.

Roy N. · Answer

@Jon Klaus

We provide architecture and security services to folks building software (code audits, designing for fault tolerance and redundancy), mostly in the communications  sector.

We also have a couple of our own in house software projects ... one of which is/was responsible for our move into real estate investing (we needed a live laboratory).

James Park · Answer

Thanks for the responses. I believe in owning your primary residence and your rental properties, but I am sort of torn if it is better to rent or to own the office where you house your business. I am currently renting office space 5 minute away from home but the rent is so cheap right now in my area. At the same time commercial seems to have hit rock bottom in the Atlanta market.

It makes a lot of sense to stay away from office condos and own the office itself for example already stated by John Klaus. I have heard the same advice from Joel Owens as well.

Here are couple questions I've been thinking about:

1) If you later decide to retire, sell off your business, or your business doesn't make it, which type of commercial space will be easily rentable or easy to sell off when the time comes: industrial, office, or retail strip malls.

2) For those of you real estate brokers who operate their own brokerage, do you work primarily from your home office, rent office space, or own? What is your preferred setup and why?

3) I've heard before that there is a great tax benefit of leasing the office space LLC that you own back to your S Corporation. Can someone please elaborate on tax advantages of doing this.

4) If you operate a services business (tax services, brokerage, IT services, financial advisory services) and want to scale your business over time... is it better to rent or to own? Why?

Sylvia B. · Answer

That is what we do. Our business pays rent to our LLC that owns the building.

Roy N. · Answer

Jerry:

What about paying rent to yourself .... or a company owned by you.

Jerry W. · Answer

@James  Park  I bought my office.  I tried to do an office out of my house for a brief time, then moved into an office and rented it for about 2 years, then I bought an office with a partner and rented it out for about 4 years then moved in and eventually bought the partner out.  I just payed it off this month.  I do rent a room out for $300 per month to a book keeper.  I generally like owning my own office, but it has its own headaches.  I had rood damage during an extremely bad storm awhile back and I have not been able to find a contractor I like to repair the ceiling or replace the roof.  That means I will do it myself next summer unless I find someone by then.  there is maintenance like any other property, in fact I think there is more.  Overall though I think it was a much better idea than paying rent.  I have a building worth about $80K that I can sell if I choose.  I also like not having to answer to someone for rent or permission to do changes, and I do not have top worry about someone else having a key to my business.

Jon Klaus · Answer

What's your IT business do, Roy?

Roy N. · Answer

My other (IT related) business use to rent office space (from our Real Estate company), but now we simply rack space in a datacenter and the office is virtual.

Dawn Brenengen · Answer

1.  I work from home.  I considered renting a small office just to legitimize the business, but I like working from home, so I haven't made the leap.  Plus, it seems like I get plenty of business even without a professional office so I haven't felt the push.

Jon Klaus · Answer

I used a regional bank for the mortgage.  The qualification and documentation requirements weren't all that different from a residential investment mortgage. You can also check into SBA financing.

For those of you who are small business owners, do you own or rent the office you house your business?

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