office condos Are you familiar with the term "office condos" but aren’t sure exactly how they work? A condominium, whether it’s commercial or residential, is a building with multiple living units, with each unit individually owned. An office condo can be thought of as a commercial office building but instead of renting out office space, individual investors buy their own instead of renting.

The concept really makes sense when comparing any standard “rent vs. buy” scenario. Renters pay the property owners each month in exchange for living or working in the property but at the end of the lease term, the renters must decide to extend the lease or find other quarters. For those who buy their office space, there are monthly payments made to the condominium lender but the payments go toward the principal balance as well as interest expense. Equity is achieved both through gradual appreciation as well as principal pay down. Owning the office space instead of renting makes financial sense.

And just as residential real estate investors can buy a multi-unit property and live in one of the units, the other tenants are in effect paying for the owner’s mortgage payment plus positive cash flow. Office condos do have a disadvantage with regard to liquidity. Should the office condo owner decide to move, the property will either have to be sold or rented out. A business person who rents has the ability to change locations when the lease expires.

All that said, businesses do need office space and an office condo is a way for the business owner to gain equity and eliminate rental expense. In addition, individual condominium offices are much less expensive to own than building a new office from the ground up or rehabilitating an existing commercial property.