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

13 Replies

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 business

5) 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?

Medium jcrp logoJames Park MBA, Johns Creek Realty Partners LLC | [email protected] | 678‑865‑6250 | http://www.johnscreekrealtypartners.com | GA Agent # Broker 344981, CA Agent # Broker 01894781, GA Lender # NMLS 157229

We own our own building.  We leased it with an option to buy, and then bought it six years ago.  I'm very happy with the decision, we bought it in the down market, and it's appreciated pretty well.  No other tenants currently, but we do have room for at least one.  A benefit of owner occupied commercial real estate is that you can get really good financing, we have 2.99% fixed for 5 years. 

@Jon Klaus
Jon, thanks for replying to my post. Do you think it is a good investment to buy an office condo vs office building in a good location? The commercial market here in Atlanta is absolutely dirt cheap right now and haven't really rebounded like residential. 

Jon, how did you go about financing your office building for 2.99% fixed for 5 years. What type of supporting documents do you need to provide to get owner occupied commercial lending? I assume the lending process is very different from residential. 

Thank you.

Medium jcrp logoJames Park MBA, Johns Creek Realty Partners LLC | [email protected] | 678‑865‑6250 | http://www.johnscreekrealtypartners.com | GA Agent # Broker 344981, CA Agent # Broker 01894781, GA Lender # NMLS 157229

I'd stay away from office condos for the same reason I would stay away from residential condos. Lack of control and other people making decisions about your property, not to mention unnecessary expenses. 

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.

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.

Medium buysellinvest.2Dawn Brenengen, Trailwood Realty, LLC | 919‑840‑8692 | http://www.trailwoodrealty.com | Podcast Guest on Show #101

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.

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.

Medium greenapartmenthires 1024x1024Roy N., Louer Louer Ltd. | 1.506.471.4126

Originally posted by @Roy N.:

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.

 What's your IT business do, Roy?

@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).

Medium greenapartmenthires 1024x1024Roy N., Louer Louer Ltd. | 1.506.471.4126

@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.

Originally posted by @Jerry W.:

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.

 Jerry:

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

Medium greenapartmenthires 1024x1024Roy N., Louer Louer Ltd. | 1.506.471.4126

Originally posted by @Roy N.:
Originally posted by @Jerry W.:

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.

 Jerry:

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

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

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?

Medium jcrp logoJames Park MBA, Johns Creek Realty Partners LLC | [email protected] | 678‑865‑6250 | http://www.johnscreekrealtypartners.com | GA Agent # Broker 344981, CA Agent # Broker 01894781, GA Lender # NMLS 157229