is it more interesting to buy or rent its offices ? This is a question that many companies pose every day. Buying or renting your professional real estate is an issue that should not be swept away by a hand, and that deserves a real reflection. Rather than providing a definitive answer, which depends a great deal on criteria specific to each company, we will try in this article to see the positive and negative points of each solution.
Buy your office, security but no flexibility?
Buying a real estate for professional use to establish its business seems to be on paper the most logical solution, and besides that which must be aimed at the end of the companies. After all, in the personal sphere, we often hear that owning is an essential point for the French. Why would it be otherwise in the field of professional real estate? To become an owner of its offices allows to build up a wealth and avoid spending every month money in the form of rent. To buy its offices is also a real guarantee of security, the classic commercial lease is no longer applied, the company can enjoy its property as it intends without time limit.
However, we have a few downsides tobuying office space for a company. In the event of a strong change in activity and especially a decrease in turnover, the company may not be able to afford its premises! With a reduced self-financing capacity, and other charges weighing on it, the company may find itself in trouble with a credit to the large amount contracted to buy the offices.
Renting its offices, from freedom to "lost funds"?
Alternative to the purchase of professional premises, renting is a solution chosen by many companies. It must be said that the renting of offices has two main advantages:
- renting is the freedom to be able to change addresses and thus to adapt the size of the offices but also the geographical location of the latter according to the life of the company. Small offices initially, bigger to accompany the evolution of the company, then in another city to accelerate the growth... Anything is possible;
- Second great advantage of renting offices, no need to turn to a bank to finance the domicile of the company! A boost may be required from a banking agency to finance the deposit or even the first rents, but to rent, it is not necessary to use the credit.
Office Rentals have a major drawback: the amounts paid each month are "lost funds". While a company owning its premises will repay a capital, a company that rents them pays a rent... You also have to pay attention to the financial side to the amount necessary at the beginning of the rental to be able to enter the premises. Between the commissions required by certain real estate agencies, the rents to be paid in advance or the security deposit, the invoice is often salty for the start-up company. Hence the interest of renting offices with real flexibility, without a lease 3-6-9 for example, and with a limited commitment as proposed by Symphony Partners.
What is the right solution? renting is the solution that brings the most flexibility but does not allow in fine to build a real estate property. Buy on which professional is therefore still for many companies an excellent solution because it allows to invest, but attention the important financial effort to realize. Between the cash to be mobilized and the long-term debt (possibility to amortize the purchase over 25 to 30 years), the acquisition of premises will not in general be the priority of the nascent companies but a problem to be taken into account once a real Found stability and a willingness to invest in the long term.