A Thumb’s Rule Guide to Opt for Commercial Space: Will You Buy Or Rent?
If you’re a Noida-based startup firm, search more about the Office spaces in Noida. A budding entrepreneur thinking of initiating a small-scale business with a few employees can also search for the commercial spaces situated in Noida. If you want to rent a shared space, don’t forget to demonstrate the amenities that you require alongside.
With digitalization and revolutions in the modern real estate sphere, it becomes convenient to find a solution for almost all your property-oriented problems. With the right commercial rental services, you wouldn’t regret it later on. So, are you ready to find out the right office space for rent in Noida? If yes, keep reading on.
Renting Vs. Buying An Office Space in Noida
Who would have wondered that the New Okhla Industrial Development Authority, aka Noida, will become an IT hub in India someday? Now that this place in UP’s Gautam Buddha Nagar district has to become the IT hub, more companies are getting introduced. That gives an incredible opportunity for more entrepreneurs to open their businesses and initiate building a startup in the city. Are you one of them who intend to flourish in your business career by initiating a startup?
Even if you are, you might experience a lot of difficulties while searching for a rental space. Some of your well-wishers might also tell you that buying Office spaces in Noida is more impactful than leasing. And as a beginner, you will apparently go all confused to decide on something that will be profitable! So, if you are wondering about what to do, here’s presenting your safe guide. Once you learn the benefits of buying and leasing, you can make your decision conveniently.
Advantages of purchasing a commercial property
Given below are the advantages of buying a commercial property. Let’s dive into the narration to learn further on this front.
#1 You can get total control over your property
So, the first fantastic benefit of purchasing office space is that you get total control of it. You don’t have to think about other companies and how they are working with you in the same space. That even hint at the fact that you can make specific renovation choices according to your preference. Admittedly, buying a property will help you operate flexibly. Besides having flexible business timings, you can even conduct your business in an innovative way to increase productivity.
#2 Long-term financial outgo
The overall financial outgo for rental services might be more than the amount you pay to purchase commercial real estate. In case you are in a retail store, the location of your property is perhaps an important aspect. Thus, buying a property is a safe option. Additionally, the future financial figure for rents will get increased by the landlords. And that may result in leaving that location in search of a different one.
#3 An increase in the land value
When you aim at moving to a particular location where the land price will increase over the years, purchasing a property becomes a safer decision. The property prices might increase because of the improving social and physical infrastructure in that particular area. It might happen due to an improvement in demographics. Whatsoever might be the reason, it becomes a better bet when you spot the trends earlier, especially when prices aren’t too high. When you decide on purchasing a property in such an area, you can enjoy the perks when the real estate value increases.
#4 Tax savings
If you decide on purchasing real estate for commercial purposes, it may lower the tax outgo. While your rent might be non-deductible, the money spent on the purchase may attract incredible tax deductions. When you take the loan for a purchase, the deductions are available for interest rates paid via EMIs. That may result in savings.
Now that you have learned the different perks of buying a commercial space or office space, let’s not waste time and learn the quintessential perks of leasing. Upon then, you can which option is better?
Benefits of leasing an office space
Given below are the important perks to Office space for rent in Noida. Read on.
#1 Cash Flow
From the cash flow standpoint, leasing a commercial property is far better than buying. And in case you are new in your business & your business’s revenue stream is just growing, leasing is your safer choice. Considering the rental services, the initial outgo gets limited to security deposits & the initial month’s rent. On the other hand, the first outgo will become the whole of your property price in case of the purchase. And when it’s a loan, your down payment for the loan of the property is higher. So, that makes it evident that renting is a safer solution.
#2 Property Maintenance
Maintaining the property becomes a burden for a house owner. And when it comes to renting, the burden is upon the landlord’s shoulder. You have to do the least to take proper maintenance of that property. That will make your job of concentrating on the core business a bit challenging. So, if you want to keep yourself away from periodic maintenance, you must select an Office space for rent in Noida. With a rental solution, your maintenance expense is lower. And in case you buy a property, you have to keep a significant amount of money for the maintenance of the building besides daily repairs.
#3 Retaining Flexibility
You might wish to retain flexibility & not get tied down to one location for a long period of time! On that note, leasing offers you more mobility than an outright purchasing decision. Shifting to another location by selling your previous commercial property wouldn’t be a justifiable move, would it? And then, there are the selling norms and rules that you need to follow. And no wonder, selling a property is itself a time-consuming affair too. That makes leasing a more rewarding solution for budding entrepreneurs.
#4 A businesses rating might not support the loan all the time
Your company’s credit rating might or might not be able to handle the loan for the purchase. Alternatively, the interest rate might be extremely high when the rating is inferior. In the times when you face such issues or any other financial challenges, it becomes difficult for your company to cope. Moreover, banks would also not extend the loan. These situations arise when you are unable to pay the monthly loan for the property purchase. However, these scenarios would never arise or stop your business operation if you opt for a rental option.
#5 Declining the property prices in that locality
There are different localities that might be witnessing a reduction in real estate values. Just in case you find the property that meets all your business requirements in a locality, the best thing you can do is to rent that property. That will benefit your business and generate profitability.
After demonstrating the advantages of purchasing or leasing a property, are you convinced to rent commercial real estate? If yes, it’s time to delve into the following steps. Are you looking for the Best office space in Noida? Keep reading on to learn further on this front.
The Downside of Purchasing An Office Space: What Makes Leasing A Standalone Option?
All this while, we’ve been discussing the pros of purchasing office space and the perks of commercial rental spaces. But do you know the cons or downside of purchasing an office or commercial space? Well, let’s read through the narration below:
It’s not a flexible decision.
An emerging business might experience unexpected requirements in the future. And in case the business continues to develop, the office space that you own may become inadequate. That even forces you to the selling of the property. Just in case you are thinking of future development of the business or extend it shortly, that will only force to selling the property in the near future. So, that’s the most disadvantageous aspect of buying a commercial space.
Upfront costs
Purchasing the commercial space can initially cost more upfront. But that’s not the end of the story. You also need to consider other costs such as appraisal, property, as well as maintenance costs. Alongside, there’s a massive down payment you need to make every month if you take a loan for the investment. That’s what makes your purchasing decision insignificant.
Steps to Follow When You Decide On Renting An Office Space
The 21st-century real estate domain in India experiences aggressive competition. Thus, rent agreements require getting worked smartly. When you decide on renting an office space, it is important to what to ask. You also need to be familiar with the laws in accordance with the business. Understanding the laws may help you avert expensive mistakes alongside saving money. The commercial property for lease gets governed by the Transfer of the Property Act.
So, do you have any idea of what a leasing agreement is? Well, it’s the process wherein a property gets leased out for commercial purposes. That may include the lease of the store, an industry, an office, or any other commercial building. Moreover, the commercial lease agreement doesn’t have the standard/required form (unlike any other contract). The party uses the form only if the basics of lease agreements are present.
Now that you have learned about what a lease agreement is, do you want to opt for such an agreement? If yes, here are the steps that you need to follow. Do you want to rent the Best office space in Noida? Let’s delve into the following narration:
Step 1: Validation for the Title Ownership
It is imperative that you ensure that you have all details of the property’s ownership. So, access to a title deed just becomes a prerequisite to authenticating rents. You can investigate and confirm that neither the sub-rents nor rental forms associated with that property are there. Ensure it right before getting into that agreement with your prospective landlord.
Step 2: Sanctioned Plans & PoA or Power Of Attorney
When the real estate that you’re renting is the building that’s under construction, it’s safe to verify its title deed & commencement certificate registered by authorities. When it’s about renting a commercial space in any built-up real estate, always ensure that you properly look into the details of the occupation certificate. More importantly, do check & confirm whether there’s any PoA or power of attorney involved in that case.
Step 3: Ensure Proper Renting Agreement
Before you enter into the mutual commitment form with your landlord, it’s imperative to ensure that the rental agreement is based on the operations. Always specify the nature of your rent – meaning, is it a shared space agreement or a rental lease contract? Be specific about your selection.
Step 4: Verifying the Income Tax and Mortgage
What’s best recommended is to verify the landlord’s income tax background, especially if it’s your commercial lease or shared space agreement. Checking the income tax status of the landlord will ensure that you keep a note of the pending disputes or any illegal proceedings. Keeping a note of it will ensure whether the property is categorized under Income Tax Act as ‘residential’ or ‘commercial’.
Step 5: Property Agent’s Background Check
If you choose a property agent, it’s noteworthy to run their background check before engaging in the services. Information on agents gets assessed through past rent agreements or via word of mouth. The agent’s inhibition in doing so would be an indicator of the fraud activities from the past if any!
Step 6: Validity of A Renting Agreement
The commercial lease agreement should evaluate the following information besides the other clauses;
ü Start & termination dates
ü The rent amount & details of deposits
ü Property address
ü Interval of payments
ü Provision of the rent renewal
ü Names of parties involved, including signatures
ü Names of tenants & landlord, besides other parties involved alongside signatures
If you are opting for a shared office space agreement, you must ensure that the working hours have been mentioned. Otherwise, you may face future complications
Ensure to Rent for Over A Year
The rents for the period of over one year must be a compulsory move, so you must register accordingly. A stamp duty that’s payable on the rent deeds & rent agreements happens to be high. It gets computed on the annual rent alongside payable deposits. The stamp duty amount is almost equal to the sale deed. And the usual practice is just to split up your rent into a total of two halves. Make one of them as the amenities agreement. That will never require any registration.
What are the consequences of the non-registration of the lease deals?
Non-registration of the rents for over a year is indeed a serious issue. It doesn’t establish rights between the tenant and landlord. Plus, you cannot produce any matter in court. Under stamping the document is indeed excusable. However, non-registration makes documents inadmissible as evidence.
The answer to whether you want to buy or lease office space is a debatable topic. It’s not that simple or easy for a majority of small business owners to decide on their choices. But whatever you decide on, your decision would hinge on a combination of tax, personal, and financial issues. While surveying more about it, always bring in an accountant & financial planner to guide you with the right choice.
Upon selecting the office space, always consider creating an office that only allows your employees to work flexibly. Even if you provide them with a remote working choice, ensure that it does not hinder their work nor affect productivity. With the aforementioned tips and tweaks kept in mind, you can choose the right solution for you. There are multiple leasing and buying options in Noida.
Comments
Post a Comment