What you need to know about buying ‘big’
PURCHASING commercial property in the $2 million-plus price bracket can bring big gains. Any potential risks involved with larger investments can be avoided if you seek adequate legal, financial and property expertise. Colliers International Toowoomba’s Commercial agent Mike Turley discusses some guidelines to investing in higher-end property.
Focus on the destination
For many portfolio holders looking for consistent and stable returns is done through spreading their investment over a large-scale portfolio.
However, large portfolios come with higher management, purchase and holding costs – so, for many local investors, it is better to make one or two high-value purchases after a little homework.
"If you are looking to make a big-scale purchase and are wanting that investment to be relatively safe, it is paramount you look for a great location with amenities and infrastructure," Mr Turley says.
"Investing in commercial real estate close to an established retail, education or healthcare hub or a major transport network is likely to bring better results for both yield and capitals gains over time," he added.
Don’t be fooled
No matter how attractive a property may seem, taking adequate steps to ensure it is a reliable investment is essential.
During the due diligence period you should asses three key things: a land registry and statutory authority searches to confirm ownership and identify any development restrictions that may apply, review tenancy documents to assess the current income and expenses, and then the assessment of the physical structure of the property.
When reviewing tenancy documentation, it is worthwhile to do so with your property manager to identify any restrictions for future tenants as well as to identify any further income potential from current leases in place.
It’s all in the structure
Once you have found a property in the perfect location and its numbers have checked out, you will need to ensure you have the correct ownership structure in place for purchasing the property to minimise your tax liabilities.
"For both domestic and foreign investors, establishing a holding company or unit trust are effective paths to a more tax-efficient ownership," Mr Turley said.
There are legal, accounting and tax implications for choosing a structure for your property purchase and it is important to always seek advice from an accountant and solicitor prior to purchasing.
Employ a dream team
Colliers International Toowoomba offers a full-service asset management structure across the commercial market, servicing all property sectors. To discuss your large-scale property purchase in more detail and to identify potential growth, contact Mike Turley of Colliers International Toowoomba on (07) 4659 7875.