BiggerPockets

Am I correct in assuming that most investors do not have a storefront/office space where they conduct business?
Is it considered not necessary due to "virtual offices" and home-based business practices? Are there even full-time wholesalers that haven't rented/purchased a professional office?

Home office here too. My real estate investing work is done virtually or by meeting with the sellers at their property. Even my bookkeeping business is done mostly from here. I have virtual bookkeeping clients. There's no traffic jams and I can spend more time on billable work.

I have trouble imaging the advantages outweigh the costs.

The biggest advantage that I can see is that you can use pre-tax earnings from your investing business to purchase the office space for that business.

The tax advantages are the biggest reason why you might want to do this (barring any specific need for the space).

So, are you saying that you should spend money on an office that you don't need so that you don't have to pay taxes on that income? If you've got too much money, why not just work less and not make so much money? I think I'd rather pay taxes on the money I make than spend the money on something I don't need for the sole purpose of not paying tax on the income.

Mike

If I am not mistaken (and please check with your tax professional), if you have a space in your house that is only used for your business and only your business, you can take that square footage divide it by the total square footage to get a %. That % can then be multiplied by your annual utilities, security system, mortgage payment, insurance, and property taxes as expenses that can be charged to the business.

There are some neuances that have to be observed when doing this so check with your tax professional.

2008 is the first business year that I am going to charge these expeneses after hearing about it from my tax professional early last year.

home office but used to have a satellite office. I find it easier to work from home and not have data scattered between two places.

i don't write off my home office either because my cpa said its a "red flag".

On the construction side of the business, clients like being here at our home office. They say it makes it feel "cozier" & they can see our work.

What i DON'T like about the home office is that sometimes its hard to know when to stop working.

I have a home office and just can see spending money on an office location, regarless of tax benefits or not. To me, it is not necessary for our business. If you are a Realtor, then I can see how you need one to invite clients, etc.

As far as home offcie tax deductions, that is certainly an option. As for the rules and amounts, it is highly recommended by me to check with your CPA as I am not one.

My office is Starbucks ;)

I agree with Chris, if you can get away with having a home business then you are fine. But, if you deal with rentals and lease options and subject to's like I do, then you need a SEPARATE office and heres why. They will now come and see where you file these documents that have clients social security numbers and valuable info. You must have a separate part of your home to store this sensitive info.

Also, if you do meet with clients I do not know about you, but I have found it to be valuable to have clients meet me at my office which is not my home. I guess from a business perspective that makes sense.

Douglas