Due Diligence: 5 Key Issues to Verify + Questions to Ask!

Due-Diligence
WHENEVER YOU embark upon a physical Due Diligence for any Commercial property, there are five key issues on which you should focus. And all of them need to be fully explored.

Depending on the size and type of the building, you may well require a more-detailed analysis. But for the time being, this will provide you with a basic checklist. [Read more…]

Never Cross Collateralize Your Loan Arrangements

Cross-Collateralizing
Part 1: Don’t be easily Swayed by your Bank.

A COMMON piece of advice given by mortgage brokers to Commercial property investors — at least, by astute brokers — is to keep securities for each loan separate. In other words, any form of Cross Collaterization (as it’s known) is to be avoided at all costs.

So, just what is Cross Collaterization; and why is it so bad?

Put simply, it is the combining of one mortgage registered against two or more properties (or sometimes even your business) as security. [Read more…]

Where There’s a Will … There’s a Way

Wills
TO DIE “Intestate” is to die without having made a Will. That means the distribution of your estate would then be in accordance with the law, and potentially against your wishes.

And that’s because, without a Will to provide a clear allocation of your assets and property … estates are divided according to the applicable state or territory legislation.

The legislation provides for the distribution of an estate in light of considerations such as … whether the deceased leaves any partners, children, living parents, brothers, sisters, or children of brothers and sisters. [Read more…]

Commercial Property Owners Could Be Saving $’000s in Depreciation

OfficeExterior1
COMMERCIAL building owners still remain unaware of the full taxation benefits their property could generate. One of the most worthwhile (yet often missed) deductions available is building depreciation.

As a building gets older and items within it age, they depreciate in value. The Australian Taxation Office (ATO) recognises this and allows property investors to claim deductions relating to the wear and tear on buildings and the fixtures and fittings within.

Claiming depreciation is the key to increasing the cash flow you generate from your Commercial properties. [Read more…]

As a Developer or Investor … What Should You Expect from Your Project Manager?

Office-Refurb
EVERY CONSTRUCTION or refurbishment project is unique, in its specific requirements and challenges.

Accordingly, each project requires a broad range of skills and experience — which a professional project manager needs to be able to deliver.

So what is it you should be looking for, when appointing a Project Manager? [Read more…]

Be Wary of Bank Bills

BankBills2
Part 2: Remain in Control of your Destiny

LAST WEEK, we made a start on understanding the pros and cons of Bank bills. But you also have other options.

Non-bill facilities are available through the big four banks, but are generally priced in a way as to only be competitive at smaller loan amounts.

While the big four banks are generally able to price better than smaller lenders, there are other factors considered to be important than merely the cost. And for small business, the interest rate on their borrowing is a relatively small consideration, in the overall scheme of things.

Far more important is access to credit, and flexibility of being able to draw up and down on that credit. Because, having this ability will reduce your overall interest costs in the longer run. [Read more…]

FAQs About Depreciation

Depreciation
AS WE APPROACH the end of the financial year, many Commercial property owners often seem rather confused as to all the Depreciation deductions they might be entitled to.

To help you, here are the most commonly asked questions — purely to highlight just how depreciation can significantly bolster the overall cash return you can extract from your Commercial property.

1. What actually is Depreciation? [Read more…]

How to Complete a Building Project on Time & on Budget

ProjectManagement2
AS YOU DISCOVERED last week, carrying out a proper due diligence is vital for any significant Commercial property purchase.

And that’s part of our role … assessing the overall structure, along with the various building services — simply to ensure they are all in good order.

However as time goes by, you may well have the need to upgrade or extend your building … if only to meet the changing needs of your tenants.

Yet this is where many investors seem to get into trouble — by undertaking something well beyond the limits of their capabilities. [Read more…]

Be Wary of Using Bank Bills

BankBills
Part 1: An Understanding, plus the Hidden Costs

WHENEVER YOU ARE financing a commercial property investment or a business, the types of funding can be broadly classified into two categories: bill facilities and non-bill facilities.

The Concept

Bill facilities are charged as a margin over the inter-bank lending rates, published each day in the Financial Review as commercial bills; while non-bill facilities are charged as a straight interest rate.

The funds for these facilities may also be raised through the money markets, but they are priced on a simple interest rate basis over a loan term. [Read more…]

The Tax Man and You

TaxDepreciationBEING A COMMERCIAL property owner, the Australian tax system allows you to claim a deduction from your income.

And that relates to the wear and tear upon the structure of a commercial property, and the depreciation of the plant and equipment items it contains.

Depreciation is available to all property owners who generate an income from that property. But the secret is to make sure you maximise these deductions, to boost your bottom-line cash flow.

By maximizing your tax depreciation deductions every financial year can make a huge difference to the tax you pay. And it may even result in the ATO paying money back to you, at the end of the year.

A few facts about Depreciation for Commercial Properties [Read more…]

Proper Due Diligence is Vital

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MANY PEOPLE will make the mistake of not carrying out a due diligence study BEFORE they acquire their Commercial properties.

But this can end up becoming a very expensive process — because you’ll can often miss out on the property, if someone else snaps it up, before you’re able complete your study.

Therefore, the secret lies in ensuring you negotiate a deal — where your due diligence occurs AFTER you have tied up the property, under a binding contract of sale.

Anyway, here are the 5 Key Elements you need to investigate … [Read more…]