How to Use the Equity in Your Commercial Property

Equity-Release

RESIDENTIAL PROPERTY INVESTORS commonly release equity in their homes in order to invest in other property. But can you do the same with your Commercial property?

Equity in Commercial Property

It is possible for you to utilise the equity in Commercial property … but it is a bit more difficult and complex than with residential property.

Banks are more risk-averse to Commercial property funding than they are to the residential market. And they will want to have some measure of control over the use of funds — before releasing cash to you. [Read more…]

How to Find the Right Builder

The-Correct-Builder

LIKE ALL THINGS, there is a “right” approach and there is a “wrong” approach to finding the perfect builder for your project.

Some developers, investors and building owners fall into the tempting trap of trying to cut costs — by bringing in builders who offer to work for much less, but who may not have the experience needed for that particular project.

These people hope that by reducing initial costs, they can boost their overall profits. Unfortunately this tends to backfire on them, more often than not. [Read more…]

How to Write-off up to $6,500 … Instantly!

Small-Business

SIMPLER DEPRECIATION LAWS have recently been introduced to assist small businesses — which take effect as from the 2012-2013 financial year.

Under GST rules, every Commercial investment property is deemed to be a “going concern” … or in other words, a business. Therefore, you could qualify to benefit from the instant asset write-off threshold having been increased to $6,500.

This new rule allows businesses to write-off any depreciating asset with a total cost less than $6,500.

Previously, the cost threshold was $1,000; and anything over this cost could not be claimed as an instant deduction. [Read more…]

Environmental Issues Loom Large Among Commercial Property Transactions

Green-Building

ENVIRONMENTAL CONTAMINATION is fast becoming a contentious issue in the 21st century. As such, it is not surprising this is becoming one of the key factors in property transactions.

Sale contracts

All aspects of contamination and compliance with environmental laws have emerged as an issue in negotiations between vendors and purchasers.

Generally speaking, a vendor will aim to sell a property ‘as is, where is’. Accordingly, the vendor’s preference would be for the purchaser to rely on its own enquiries; and therefore, buy the property in its present state of repair.

This would mean the purchaser buys the property subject to any pre-existing contamination, or non-compliance with environmental laws. [Read more…]

Claiming Depreciation Can Transform Your Bottom Line

BMT-Tax

IN MANY CASES, commercial properties are positively geared. And that means their rental returns are often higher than loan repayments and outgoings for the property.

What what you may not realise is that the income received from a positively geared property can have avoidable tax implications.

Claiming depreciation on a positively geared commercial property can help you substantially reduce your overall taxable income, and further improve your after-tax cash position.

Perhaps a Case Study would help … [Read more…]

Control The Loan Process

Commercial-Loan-Application

THE OTHER DAY, I was doing some analysis on the loans lodged over the past year … looking at the time-frames, and where the delays have occurred.

And I was struck by the number of stages a loan application needs to go through, before settlement. Plus the number of people the file depends upon, to go smoothly.

The people involved in this process can include the broker, the bank officer, credit analyst, valuer, borrower’s solicitor, bank’s solicitor, vendor’s solicitor, accountant, financial adviser (if financial advice is required), real estate agent and, possibly, the tenant.

As you can appreciate, delays can occur at the hands of any of these stakeholders with dire consequences. That’s why it is advisable (as far as possible) for you to retain as much control over the process as you can … in order to avoid potential pitfalls. [Read more…]

Detect Hazardous Materials BEFORE Demolishing Begins

HazardousMaterial

HAZARDOUS MATERIALS are found in a range of locations, forms and types of building structures; plus they are not just limited to Commercial projects. Unfortunately, they are widely spread through residential and public properties as well.

The identification process is the first step for anyone wishing to undertake alterations, demolition or disturbance of materials — which could be potentially harmful to workers, or the general public. And then, you need to quantify the cost of rectification; and what effect that will have upon your intended project.

3 Key Questions to ask … [Read more…]

With Commercial Property Managers … What Should You Expect?

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Commercial-Property-Management

OF COURSE, everyone’s expectations will differ as to how your property should be managed. But over the years, my clients have provided a few clues. And these have been rather helpful in creating a simple checklist.

Good Property Management is the Key to Your SuccessAnd so once you’ve finally acquired a suitable Commercial property, any ongoing Management will need to make sure that … [Read more…]

How Does Property Depreciation Fit into Your SMSF Startegy?

SMSF+Depn-Pt2

Self Managed Super Funds and Property Depreciation (Part 2)

IN THE FOLLOWING EXAMPLE, your SMSF owns a commercial warehouse purchased for $700,000 with a rental income of $1,200 per week … resulting in a total income of $62,400 per annum.

Expenses for the property such as interest, rates and management fees totalled $42,000. Therefore, the net earnings of this commercial property was $20,400.

Without claiming depreciation, your SMSF would have to pay 15% tax on the net earnings, which would result in a tax payment of $3,060. By claiming $14,500 in tax depreciation, the total earnings is reduced to $5,900 leaving the total tax payable of just $885. [Read more…]

4 Key Tips for Couples Arranging Loans

Loan-Approved

WHEN BORROWING against Residential or Commercial properties for investment, it is important to keep in mind the most effective ways of claiming tax benefits, if you wish to maximise the return from your investment.

This is particularly so, when the purchasers are couples — because working with the correct loan set-up can ensure the household tax burden is considerably reduced. [Read more…]

How to Manage Those Fearsome Project Variations

Variations
YOU THOUGHT you had negotiated a fixed-price contract for your planned building works, only to find yourself being progressively hit with expensive “Variations” as the construction phase progressed.

So, perhaps it is worth exploring how this comes about, in a little more detail.

What is a Variation? [Read more…]