Before You Buy Office Space: 5 Legal Tips
What should you look out for before you buckle down and buy office space?
We recently went over tips on renting an office space, but buying property is a whole 'nother playing field. Before planning out your wall art, first figure out whether you should buy or rent your office space.
If you're confident that you want to hunker down and pay the big bucks for a piece of property, keep these five tips in mind:
- Look into government assistance. The government's Small Business Administration 504 loan plan allows business owners to pay a significantly reduced down payment on commercial real estate while still getting favorable loans. Most borrowers only have to pay 10 percent cash up front, as the SBA covers 40 percent of the loan and banks cover another 50 percent.
- Consider financial limitations. Buying a location gives you flexibility in tailoring the space to your needs and can offer tax incentives to your small business. You may also be able to lease space to other small businesses. But all of this will require a fair amount of capital before you can see a return on your investment in increasing property value or rent. If you're on a tighter budget, renting in the meantime may be a safer route while you save up for grand property plans.
- Think about size. When it comes to buying office space, size matters. Growing out of a place you own can involve more upheaval than growing out of a leased space. Think about what you will do if your business and your space requirement grow over the next few years.
- Research zoning restrictions. Zoning restrictions could limit your use of the property. If you have special needs for the space, make sure your intended uses are compliant with the rules in surrounding residential, commercial, industrial, and mixed neighborhoods.
- Think about resale value. In all likelihood, you'll eventually put your office space on the market. When that time comes, you'll need prepare for legal issues. A good real estate agent or business attorney can help with negotiations and contract issues, and can also give you advice as to whether it's best for your small business to rent or buy.
For more tips, check out FindLaw's section on Real Estate Law.
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