buy larger house for in-home business

[MichelleD1977]

Hi folks,
We are starting a plan of moving to a nearby town and I will open up a physical therapy practice there. I am considering the option of buying a larger home that I could practice out of. Office rentals are typicall $600-700/month for about $400 square feet. When I do some quick numbers crunching it seems like I could afford to pay $100,000 more on a house with the additional $600/700 per month. I know there are pretty nice tax benefits from working out of your home, but I don't know how that balances out with the additional taxes to pay on a larger house. I am looking for different ways to approach this question so I can make the right decision.

Thanks!
-Michelle

[former player]

You need to be pretty sure that your business will succeed: many small business start-ups don't succeed and that's where the benefits of renting over owning come in: you can walk away from a rental but that extra $100k in capital cost is a permanent cost, and factored on top of a loss of income could put you in serious trouble.

If the property you buy could alternatively be used as a (partial) domestic or business rental or to have a lodger then you've got a potential back-up to your business income.

[YttriumNitrate]

Do you really want your patients coming to your house?

[Fishindude]

Having been there, done that I would never advise anyone to have their business in their home.
Rent or buy and office / shop space somewhere, so that when you leave work and shut the door, work stays there.   Keep your business phone # separate too, and don't start taking a bunch of after hours business calls.

[Just Joe]

Do you face any restrictive zoning or neighborhood covenants? Will your neighbors react badly to a half dozen visitors a day coming and going?

The previous owners of our current house had a small business in the basement. Separate entrance. Electronic exterior lock that multiple employees could unlock. Locks on the stairwell going upstairs limiting access to that part of the house. In reality that door was an interior door with an interior grade door frame. Not strong. Safe area though with enough land that no neighbors were bothered.

[MichelleD1977]

I have checked with zoning and it would be OK. Of course there are pros and cons to the situation but in general wouldn't mind clients coming to my house in the right situation.  It would have to be something with a separate entrance, separate bathroom, and clear delineation of where the home and office was. I would start the business for at least 1-2 years to make sure it would be successful before buying a house. I would also look for the possibility of an air b and b rental or renting out the office space to others. It would definitely have to be an almost perfect house to make it work. Thanks for your thoughts!