When we start a business, we are faced with a number of very important decisions, one of them is whether to buy or rent an office, what is the financial impact, what factors should I take into account, the best decision will depend on a good analysis, since it is one of the basic elements for a good business strategy.  

Buying or renting an office should be considered in terms of the activity to which each company is dedicated, the sector to which it belongs and serves, as well as the expectations of future growth and expansion. 

Another key factor when thinking about buying or renting an office is how long the company has been in existence; when it comes to new companies, the possibility of buying could be lower, since, if it is not successful, it is unlikely to increase its market share. If this is the case, and as long as you do not have a solid presence in the market, the best option is to rent. 

In the case of mature and consolidated companies, there is no doubt that the option to evaluate is the purchase, which reflects solidity, image and confidence in the eyes of customers and the market in general. 

It is important to keep in mind that each company is a different case, so each one makes the decision to buy a space or rent it, depending on its economic profile and its expectations of permanence in the market.

Now, the maturity of the company is not the only point of analysis to know if we are ready to acquire a property, let's analyze the advantages and disadvantages of buying and renting separately.

Advantages and disadvantages of buying

• The purchase of office space in Costa Rica is mainly carried out by investors, but more and more developers are offering the alternative of selling.
  
• If the purchase of an office is made with the future in mind, it can benefit from the appreciation (increase in price acquired by capital gain) and if the payment can be made in cash, it will certainly imply a financial saving with respect to the rent. 
  
• It should be taken into account that having an asset could become the collateral needed to obtain a bank loan for the company in the future.
  
• The purchase of an office definitely represents a higher initial investment, however, there are options in the market to facilitate medium and long term financing, with premiums that can be low and convenient from a financial point of view.
  
• A negative point could be the sacrifice of liquidity for the initial investment, an investment that could be used in machinery, equipment or other needs of each company.
  
• When buying an office, there will always be certain fixed investments over time, given that as owner there will be responsibilities for maintenance, security of the property, etc.
  
• If purchased with a bank loan, the company's borrowing capacity will potentially be reduced for a certain period of time. 

Advantages and disadvantages of renting

As for renting an office, it can also have a positive impact on us, such as reducing initial expenses, reducing costs such as monthly maintenance fees and general property taxes, and when renting, initial payments are more negotiable and convenient for the company's cash flow.

In addition, rental expenses are treated as a deductible expense on tax returns and you have the flexibility to find a strategically located site that benefits customers, employees and suppliers. 

However, you must take into account that when renting you will have fixed monthly payments and the contractual terms, since in case you decide to cancel the contract before the established term, there will be obligations to cover such as the remaining monthly payments stipulated in the lease contract. 

Another very important aspect is that it is most likely a space that has been used by other tenants (unless it was new). It is understandable that modifications will have to be made, which represents an additional investment to have available, and in some places, not all modifications are allowed.

As entrepreneurs, certain points should be taken into account before making a decision, among them: 

• Defining the needs and objectives of each company's activity is key to selecting the size and type of office.
  
• Doing a thorough study of the area in which you intend to buy the office will facilitate the process. 
  
• Finding a location that is easy to reach, with good communications and, if necessary, with loading and unloading areas that favor the work of suppliers, will add value to the space.
  
• Its dimensions and the size of the surface area, the amount of parking spaces, are other aspects to take into account, in order to get the most out of it.
  
• Assessing whether it is necessary to fit out the office to carry out the company's activity and determining whether the necessary renovations are feasible in the chosen space will help to choose the most suitable space.

• Be informed about the regulations in force and the regulations of the place where the office is located, since each type of business and municipality have different regulations in force for the different types of business.
  
• It is necessary to know the general expenses that must be paid when formalizing the sale, such as legal and registration expenses, as well as the additional taxes to the purchase.

Sometimes it can be difficult to determine when is the ideal time to buy an office; if a company is already mature or consolidated, it might be a good time to think about whether it is convenient to continue renting offices or to buy its own. This decision will depend on each company's own financial analysis.