When you’re working to grow your business, having a little extra cash can make a big difference. But if you’re not ready to take on additional financing, you may need to get creative in finding ways to generate new revenue or control costs.
One popular solution? Renting office space to other commercial tenants.
True, becoming a business landlord is a job on top of your existing job. You’ll have new responsibilities and obligations to your tenants. But you’ll also have a great way to reduce your monthly expenses, which could make this a valuable part of your short-term business strategy.
If you’ve got extra space in your commercial office, consider renting it out. And if you are looking to purchase a building, consider finding one that has room for your business as well as a few business tenants. Not only will this option help you cover your mortgage and utility payments, but it could also help you afford a larger space to accommodate future business growth. As you expand in the future, you’ll have the flexibility to use more of this space yourself by gradually phasing out tenants.
Choose an Arrangement That Suits Your Space
In some cases, you may find a building that’s been subdivided into multiple separate offices or suites. In other setups, you may be responsible for maintaining shared facilities like restrooms or a kitchen, which is attractive to tenants, since this gives them one less thing to worry about.
Even in a smaller space that’s not subdivided for multiple businesses, it’s still possible to attract renters and bring in additional income. Plenty of professionals who don’t need their own offices are willing to pay well to use yours. Maybe you have an extra office you don’t currently use, or space for one or two extra workstations you can rent out to professionals who are in the early stages of building their business.
Offer Flexible Options to Tenants
Today’s professionals are more mobile than ever, as exemplified by the rising popularity of coworking spaces and working remotely from home. But even with new technology and more flexibility, many independent professionals and small businesses still need a convenient office to serve as home base. That’s where you can come in.
You may be able to find tenants who aren’t in need of a permanent office to use every day, but instead are looking for a satellite office to do business from when they’re in town to meet clients. Offering stations that are fully set up with a phone, power, speedy internet access, and even office supplies will appeal to these renters, and renting to two or three people who each pay for one or two days a week can generate even more revenue than renting to a single person.
What to Consider First
You want to ensure that renting out extra space will boost your cash flow without disrupting your operations. Before you commit to renting office space, be sure to consider:
- How much you’ll need to invest upfront to prepare the space for tenants (e.g., by making small renovations, painting and carpeting, or buying furniture)
- What amenities you will offer, such as access to your conference room, Wi-Fi, or copier
- State and local laws that may affect you, your tenant, and the terms of your lease (e.g., tenants’ rights and safety and parking regulations)
- Whether you’ll need extra insurance coverage
Once you’ve got a clear plan and have determined how much rent you will ask for, network within your local business community to find potential renters. There are also many online platforms you can use to advertise your space and help find the right tenants for your unused business space.