All Topics / Help Needed! / TO BUY OR NOT TO BUY?

Viewing 5 posts - 1 through 5 (of 5 total)
  • Profile photo of Born2BBorn2B
    Participant
    @born2b
    Join Date: 2004
    Post Count: 2

    Hi All,

    Would like to know if it is a good idea to buy a commercial property for our karate club.

    We are currently renting a hall for $160 per month (as we increase members so too rent will increase). We also have the opportunity to purchase our own premises for $50,000 (may be negotiable). The benefits in having our own premises are enormous but will realistically wait until we have almost doubled active members to purchase.

    The premises is in Portland Victoria where commercial properties aren’t good as an investment as such right now. But I was wondering if anyone had an opinion on whether to buy for use now and possible future investment or to keep paying reasonable rent?

    Thanks.[smiling]

    Profile photo of AceyduceyAceyducey
    Participant
    @aceyducey
    Join Date: 2003
    Post Count: 651

    Buy it personally & rent it to the club….

    Then rent it to other clubs as well as a club-friendly venue.

    If you do the figures you may find it becomes a nice cash cow…and if it wouldn’t – you’re better off renting!

    Cheers,

    Aceyducey

    Profile photo of theloanarrangertheloanarranger
    Member
    @theloanarranger
    Join Date: 2004
    Post Count: 47

    Depends on who we is…

    If it’s the members of the club, and you have to borrow the funds to do it, think very long and hard before you go down this path..

    Every borrower would be potentially responsible for the entire debt – would get very messy very easily.

    If everybody’s going to throw in and buy it, what happens when someone wants out? Or the club disbands? Who/what is on title? Who pays rates, upkeep, etc?

    My advice – keep renting.

    theloanarranger

    Profile photo of 1Winner1Winner
    Participant
    @1winner
    Join Date: 2004
    Post Count: 477

    Born2B
    You are paying $160 a month rent. That does not justify paying $50,000 for a property, more like $20,000. You must have other reasons for buying, like being able to modify the property to your needs, rent to others when you are not using it, avoiding increase market demand that may squeeze you out of the place due of higher demand and rising rent costs. Prestige for the club who now has “own” building. etc

    You will be paying some $250 in interest alone a month. Can you have better use for $50,000 in your line of business? Would investing 50k in a karate club give more revenues? Expanding, franchise . . .? If not, and the building is essential because of location, traditionally been there, size, than perhaps it is worth while.

    Who is going to sign the dotted line? Who is going to make repayments for the next 25 years?

    May God bless you
    and prosper you.
    Marc

    Profile photo of MTRMTR
    Participant
    @marisa
    Join Date: 2004
    Post Count: 663

    Hi,
    I guess at the end of the day you need to look at the long term.

    Commerical is a very different market from resi prop. Have you researched this area? What if you close business, can you rent again, can you sell? some commerical properties can stay on market for years.
    All these variables need to be considered before purchasing regardless of the costs.
    Also you need to seek advice from an accountant in regards how to structure lease etc. if you do decide to go ahead.
    Trying to cut costs can cost you at the end BIG TIME..
    Good luck

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