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This isn't quite the same as your situation, but recently I decided to build a box and use my existing business grade DSL link rather than commission a server half a world away. I am so glad I did because it's allowed me to easily fiddle with hardware reconfiguration, for example I just added a second hard drive and set up RAID1.
Going back to your question, there's also something in between: placing your own equipment into a data centre (rather than leasing a server from the host). You could develop it locally then move your stuff into the DC.
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