Considerations before Purchasing a Commercial Property

1.       Purchaser: Seek advice from your accountant regarding the right purchasing entity for the property. Will it be a family trust or will you setup a SMSF to purchase the property for example? Will you be purchasing with a business partner?

2.       Finance: Talk to your commercial finance broker to make sure you have the right finance structure / strategy in place to support the purchase.

3.       Security: Will you be putting up additional security to the purchase property such as a security over your business or security over another property you already own. Talk to your finance broker and avoid cross-collateralising existing properties.

4.       Deposit: Do you intend on putting in a cash deposit or drawing down on an existing facility to fund the purchase. Make sure you seek appropriate tax advice from your accountant. How much deposit will you need?

5.       Goals: Understand what your goals are by purchasing a commercial property and how this will help you reach your goals. Are you looking for income, capital growth and / or development potential? Talk to your commercial buyers agent to understand the pro’s and con’s of each.

6.       Risks: Do you understand the potential vacancy risk and do you have financial buffers in place to manage this if and when it eventuates. Work with your commercial finance broker, financial advisor and commercial buyers agent to understand the key risks associated with the property and how these risks can be mitigated.

7.       Taxes: Make sure you talk to your accountant and solicitor to understand relevant taxes such as income tax, capital gains tax, stamp duty and land tax and how each of these taxes will impact on your financial return.

8.       Identification: What are your plans to identify the right commercial property for you. What negotiation tactics will you employ to maximise your chances of securing the property in a competitive market.

9.       Due diligence: Will you conduct the due diligence yourself of engage the services of an experienced buyers agent to undertake the due diligence for you.

10.   Management: What are you plans in managing the property post settlement?

If you are interested in investing in commercial property, either as a pure investment or for your business to occupy, simply email us at [email protected] and we’ll be in touch.

Just remember, this is not intended to be financial advice and any comments or opinions are general in nature. We recommend you seek independent legal, taxation and financial advice before making a significant investment decision.