By Tina Martin ~
Working out of a home office is an excellent strategy for saving money when starting a business, but eventually, you’ll want to scale. You could rent office space, but depending on where you live, that could cost anywhere from under $30 per square foot per year to more than $90. On a 500-square-foot office, that’s $15,000-$45,000 a year just in rent. Many fledgling businesses can’t afford that kind of overhead, but that doesn’t mean you’re stuck. These are some ways you can grow your small business while keeping it at home.
Buy a Bigger House
If your current home doesn’t have enough space for your office, the simple answer may be to buy a new one. When buying a house for a home office, look for offices with separate entrances, storage space, and plenty of natural light. If seeing clients at your home, choose a location near your customer base. If primarily working online, pay attention to internet connectivity in the neighborhoods you’re interested in living.
Another option is buying a home with an accessory dwelling unit (ADU), but expect to pay a premium. ADUs can raise property values considerably, but many home-based business owners find having their own space is worth the cost. If you don’t need the ADU for business use in the future, you can rent it out for extra income.
The most important goal if you choose to buy a new home for personal and business use is to avoid overspending. You don’t want to spend so much that commercial office space would be a better bargain. Before diving into the market, decide what you can afford, and get pre-approved for a loan. Only then should you start talking to realtors and attending open houses.
Build a Detached Office
If your property is large enough and zoning allows, you may not have to move to get your detached office. Building an ADU, Accessory Dwelling Unit, will enable you to stay put while getting the extra space your business needs. When constructing an ADU for business use, decide if you’d prefer a basic office or a fully-equipped dwelling unit. While building a complete ADU gives you the option to convert it to a rental in the future, it drives up construction costs by a large margin.
Pay attention to design when building your detached office. An ADU that clashes with your home could lower property values. A unit that meshes with your home’s look, on the other hand, will increase the home’s resale value.
Most homeowners finance an ADU with home equity, using a home equity loan or line of credit to pay construction costs. Other financing options include cash-out refinancing and HomeStyle Renovation loans. Compare lending terms and interest rates before applying for a loan to find the best deal for your ADU.
Convert Your Garage
If you want to save money on a detached office, consider converting a garage. A simple garage conversion could cost as little as $50,000, less if not installing plumbing. However, it is essential to assess your garage before going this route. While newer garages are relatively simple to convert, older garages with low ceilings, no electricity, and water intrusion are likely more trouble and expense than they’re worth.
Converting a garage to an office requires installing insulation, floors, walls, and heating and cooling. You’ll also want to wire additional outlets and replace the garage door. While handy homeowners may be able to take on some basic jobs themselves, you’ll need a contractor to handle the electrical, HVAC, and garage door work.
When i comes to building your business, change is good. However, it can also be expensive. Instead of spending tens of thousands every year on commercial office space, invest in a workspace that pays you back — your home. With these smart strategies, you can create a home office that grows your business’s potential and your home’s value. Image via Unsplash.