Forum Replies Created
What an absolute furphy! We all want to keep up with the Jones's, so we all want to go one bigger. Housing size in Oz is not driven by need but by ego. Why else would we be seeing units which are bigger than the old 10 square house? Buyers might not be able to afford a freestanding house with 4 beds/study/etc located in the cbd but they can buy a low care unit with all the same amenity.
Our average housing size will come back once there is more pressure on to develop units and the price of single housing is out of reach for all but the richest in the market.
You are probably better off with a solicitor in the jurisdiction in which you are purchasing – at least they are au fait with local legislation, building/pest inspectors etc in the area without having to read the local (state) property act.
Personally, I don't believe that residential owners will feel the effects as much as those involved in commercial property however I will look at both sides.
Residential owners – have very little direct recource to reclaim any increased costs due to an ETS other than by raising rent (a very blunt instrument in a soft rent market). Areas which will be impacted will include: water rates, council charges & utilities. Owners of units will get hit harder as they will share the common area costs which includes power for lighting, vertical transportation and the like.
Commercial owners – although many have the benefit of nett leases (where tenants pay their share of outgoings), there may be some pressure to shift towards more efficient services (as is seen with 5 star and 6 star commercial buildings), greater emphasis on 'green design criteria' to reduce running costs.
You are more likely to be better off (asset-protection wise) by having the unit owned in a separate entity to the working company, a family trust or other structure would do this.
Your company could then lease the property from the other entity, thus ensuring income to pay the loan (although you, or a director of the company may have to guarantor the loan and or lease).
As you are purchasing with vacant posession, you may not get the gst exemption as you would if it were a 'going concern' however you should speak to your accountant on how to minimise the time between purchase & recovery of gst paid.
There are some concessions for new building purchasers where they are bought off the plan.
Tax Calculation – see your accountant to advise.
Risk – ownership within the operating company will leave the factory at risk if your company is ever wound up or goes into liquidation. It is probably best to lease it from you or a related trust.
Get yourself acquainted with any concessions that you may get for cgt reduction, land tax liability etc through various ownership structures,
Put it into the disputes register asap, then argue the toss. an email should be a single billing unit (6 minutes), obviously a letter would take longer. The lawyer should include some degree of follow up etc within their price regardless.
If the lease expires the vendor (and tenant) can relocate, provided that there is alternative suitable premises for them, they may sell the business to someone who may want to remain or relocate or thirdly, they may simply be looking to retire/close a loss-making business.
Capital values rise and fall at different rates depending upon the category of the property. Commercial values are more closely linked to the overall status of the economy, recessions lead to discounting of rents/provision of greater incentives whereas residential property fluctuates along a roughly 7 year cycle.
Other influences also affect the value of properties regardless of the economic cycle eg rezoning proposals, major redevelopment, infrastructure proposals etc.
Yes this is fairly typical, the agent provides a service (review of rents, lease negotiation, lease preparation etc). Alternatively, the agent could just let the property carry on under the holdover provisions but the tenant could give notice at any stage leaving you open to vacancies etc. Which would you prefer?
It would depend upon your strategy (buy & hold vs buy & sell in short term). There is generally no capital appreciation on new apartments for several years due to the price of a new unit incorporating the developer's margin. You will find that the price of a resale of a 'new' unit is about the same or less than its previous sale when sold within 3-5 years of the construction. Once they have passed this stage, they are no longer 'new' but newer than old units.
Commercial, industrial and retail (some mixed use, if I must).
I generally lean towards 25%+ on an NPV as well as having used a development model to back up my assumptions.
You will need to make certain of the zoning and consent conditions of the factory & shop so you know who else can lease them eg general industrial zoning or is it a non-conforming use?
Speak to one of the other agents in the area (who isn't dealing with this property). How easy do they say it can be leased and what is the market rate etc?
Legally, a real estate agent cannot work on your behalf without an agency agreement. That is, they have no right to payment as they don't have an agreement with you or have accepted your instructions.
You should check out whether the newsagent holds a licence as an re agent as unless they are licensed and run an RE trust fund they would be unable to undertake the work.
If they started in the bathroom, it is likely that there is a water source which termites need. This should have been obvious to a building inspector (but not necessarily to a pest inspector) – hence the need to have both inspections. If the pest inspector was not informed of the building inspection (if it showed a leak/rising damp etc) then it would be very difficult to build a case against the pest inspector.
Have a look through the archives, you are bound to find a couple of gems
You may need to ensure that there is no exclusivity clause that you would be breaching with your agent – you may be up for the commission even though you did all of the work.
Go back to his original solicitor and get advice?
Have a look at Monique Wakelin's articles on the Eureka Report, these should provide some guide to you.
Depends upon how much risk (debt) you are comfortable with. Leave your PPOR unencumbered (so no risk on the roof over your head).
Use the rental as an LOC (as above) for the deposit on a few properties (but leave enough in the kitty to cover any shortfalls due to vacancies, expenses etc). Use the other properties as the security for the loans.
Other things to consider – structure, land tax, diversification (other states)
I'd suggest locking new commercial leases into cpi as a minimum, recently did a few at the greater of cpi or 4% as well as retail in shopping centres at 5%. You won't get away with a ratchet on the retail leases.
There are many things to consider when entering a commercial deal, least of all is the rent.
You will need to undertake complete due diligence on the site, including have a qualified person look at things like any airconditioning systems, lifts, essential services compliance etc.
You will also need to review each lease as there may be subtle differences between each one.
Is the return nett or gross?
Rent reviews at 2.5% are below CPI, you will need to make a call whether you are prepared to accept such a low rate of review when CPI is projected to run above the long term average of around 3%.
