my first commercial

[Bargain Hunter]

so it seems that so far 2/3 of my issues really were not issues and i have done the wrong thing by this vendor ( unknown to me of course).

Splade,

At the end of the day the only thing that has gone wrong (if that's the correct term) is that you signed the contract without knowing the full situation.

Almost anything can be included within the terms of the contract and as the purchaser you generally have the upperhand so if you were aware of any issues they could have been included in the contract prior to signing. Atleast this experience puts you in a better position for your next deal.

Don't know if you can break the contract without penalty (subject to finance is fairly thin) but wish you well.

Personally I have no experience with commercial (apart from leasing) and therefor applaud your courage in giving it a go.

Interested in knowing if you have had much experience in the residential side of property.

Hope everything turns out as you desire.

Regards

Andrew

 

[splade]

It was not 'issues' left out of the contract that was the problem, it was things that where included in the contract, that i thought were ok, but my conveyancer and said where not. turns out she was actually wrong and it is really her fault it all went so pear shaped. and yes what i should have done was taken the contract to my solicitor to have a look over before I signed. it was a very poorly and confusing contract and my lawyer cant beleive the mess the REA has made of it. i.e a residential contract for a property which is actually part commercial.

No i dont have much experience in residential either, but the numbers added up so I was prepared to give it a go.

 

[Dazz]

a residential contract for a property which is actually part commercial.

Good onya splade for havin' a crack at it. keep chipping away, the detailed lessons you are learning right now are way beyond what you'll ever get out of a book or a forum. The nitty gritty gets brushed over too much...doesn't it ??

In terms of a ressy contract for a comm. prop, I have no clue what you mean ?? Every industrial and comm. contract I have signed has been on a bog standard transfer of Land O&A document.

It doesn't matter what the prop. is zoned, it's all either Torrens or Strata titled Land.

Maybe different in SA, but I'd be surprised if it was.

 

[grossreal]

hi all
dazzling in nsw there is a big difference between the contract for sale of resi to comm
for a start to buy comm you don't need a contract to purchase thats after you have done the deal in nsw.
but thats a different issue.
spade with regards to comm when purchasing its the same as a commercial agreement
and yes you can neg on rent before you buy and thats the norm
if you don't want to pay gst as you are buying as a going concern so no gst.
gst is not a major issue as you can re claim it if you are on a bas with gst claim monthly.
this is a learning curve and you seem to be learning
and one thing you must learn is nobody knows everything as if some one makes a mistake thats fine just fix it.
go to the vendor and tell them that there has been a stuff up and you still want to buy if thats the case.
remember one time
they want to sell and you want to buy thats the main thing that should be in the front your head it will be in theirs.
and any stuff ups along the way are humps that need to get over.
and don't feel sorry for a vendor, they don't feel sorry for you
if you are buying comm you are buying on return or potential profit and this is business,
you do what is required to gain a project within a frame of your view of what is fair (do unto others as your would want them to do to you)( may sound like preaching but a very good rule to work by).
the rest is as dazzling would say is s--t or I would say is not important.
remember we all make mistakes and the chinese say its not how may times you get knock down that is the issue is how many times you get up.
if you are at the helm, you need to go back if you want the property and have a meeting with the vendor and tell them the current position and if you want the property they will work with you to secue it.
I fight with vendors but when the deal is done and you have got an agreement, they are your best align as they are on your side
as you are both aiming for the same goal.
and for cost ask there solicitor for his advice on the contract
he will see it as a conflict
but he will give you his view and may give you an answer that your guy has not seen.( and his cost are charged to the vendor so the info is free, you don't have to take it but its a view)
I had some one once tell me a very true piece of information

get 10 accounts and 10 solicitors in a room and ask for advice on an issue and you will come out with 20 different views and 20 different reasons why the other account is wrong or the other solicitor is wrong.
your job is to throw it in the air mix it up and come out with a solution.
welcome to the world of business.

 

[splade]

yeah thanks grossreal. my conveyancer was just so confident when she said that the rent in advance couldnt be done and we should terminate that I believed her. we told the vendors solicitor that we believed the rent in advance was illegal and their response was just 'its fine' they should have sent us documentation to prove it was fine. What i really wanted to do was contact the vendor directly but was told i wasnt allowed. which made it really hard to get a clear picture of what we could do. my current solicitor has said yes it is fine and here is the legislation that proves it. that was enough for me. As soon as the trade waste person gets back to me with a clear answer about the trade waste I will move forward. and make a trip to visit the vendor. appologise for the stuff up and hopefully try and move forward.

 

[aef]

Hi Splade,

GST on property/business transfers is definitely tricky and not left to chance.

I have heard of cases where the ATO have either demanded GST that wasn't charged correctly or knocked back cases where GST was assumed to be charged. Some of the tax accountants on the forum may be able to support or refute this.

Make sure all documentation clearly states the GST treatment and get a tax invoice. Once you have documentation that clearly states the GST treatment - get this checked by your accountant.

Good luck which ever way it goes.

Regards
A

 

[splade]

Hello everyone,

The Trade waste person has contacted the vendor and discussed their setup and has advised me that they do not need a grease trap or a permit. I have re-read the contract and the new letter from the lawyer and where it originally said that GST did not apply the vendor is now accepting that GST will be inclusive of the asking price. so We were right about that one but wrong about the rent in advance and trade waste issues. although I'm still not 100% that they are not cooking chicken or hamburgers...

My lawyer has now gone on leave so i have to wait until Monday before i can work out how the GST gets paid. i.e does the contract need to be amended to say how much GST is being paid exactly in the purchase price. is that what you mean by the documentation aef?

 

[aef]

. i.e does the contract need to be amended to say how much GST is being paid exactly in the purchase price. is that what you mean by the documentation aef?

Your lawyer or accountant will be able to answer the question properly - if it was me I would want the price stipulated in the contract as $xxxx plus GST of $xxxx. I would also ask for a tax invoice for the sale of the property as well as the contract.

I would also check to see that the vendor is validly registered to charge GST.

The above points are the things I would do in your situation - I strongly suggest you have your lawyer and or accountant review the GST clauses in the contract.

Regards
A

 

[kingchevy]

What do you plan on doing after the 10 months is releasing the property or are the same tenants going to renew there lease and if so why can't the commit to a longer lease now say 2-5 years is usaully a standard lease agrement??

 

[splade]

hello,
well yes kinchevy that is the question isnt it. what am i going to do...

the current tenants are moving on in november. they have already made arangements to go and im pretty sure there is nothing stopping them now. they are leaving all the equipment behind so i was hoping to get someone in to manage it. pay them via salary + commission so they feel a sense of ownership over the place, without actually owning it.

so the question is how do i find someone to manage it. go to an employment agency? just advertise in the local paper? I doubt the current tennants will allow me to place someone in their business before they leave to train them up... but how hard can making sandwitches and cooking pies be?

anyone else taken over a small business but not actually run it yourselves? maybe i will need to take a month off of my normal job and go and oversee things myself. that is probably the best option. but how do i find someone i can trust. I guess you just have to do the checks (police check) and then have faith in people.

if that plan falls through my second plan is to try and rent it out as a commercial premisis to someone else.

my third option is to turn it into a resi 1 bed unit, but hopefully the first two will come through.

if anyone has anyother ideas i would welcome them.

 

[XBenX]

Hi Spade,

Ive done similar (owning and appointing a manager) although I did not own the building.

You need to love the Food and Bev game. There was a thread about what you need to think about where I posted my thoughts. I think it was Olly's therad. Have a read.

 

[splade]

I would love to read what you had to say. can you give me any more clues as to the title, how long ago it was etc so i can more easily find it. I did a search for posts by you and there was just to many to go through

i also did a search for posts by 'olly' and didnt find anything.

 

[JIT]

Mixing resi investing, comm investing, and small business all in the one pot. Definitely not for beginners. Good luck with it though. Thanks for sharing it here.

GSJ

 

[geoffw]

the current tenants are moving on in november. they have already made arangements to go and im pretty sure there is nothing stopping them now. they are leaving all the equipment behind so i was hoping to get someone in to manage it. pay them via salary + commission so they feel a sense of ownership over the place, without actually owning it.

so the question is how do i find someone to manage it. go to an employment agency? just advertise in the local paper? I doubt the current tennants will allow me to place someone in their business before they leave to train them up... but how hard can making sandwitches and cooking pies be?

Splade

When I took over my Subway, my aim was for a business which would not take to much hands on to run.

MrsW would handle the small amount of admin, I'd keep my $80K pa job. Easy as, easy peasy, whatever the term is now.

2 1/2 years later. No way. I'm full time managing (full time = 361 days pa), MrsW is in a small bikkies job just to keep the family together. I'm working twice as many hours for half the money.

If you're asking these questions- sorry. Don't do it.

 

[splade]

well i kinda figure the resi part will offset part of the risk of the comm bit. and i have a few contingency plans. I agree it could be a whole lot of trouble more than its worth as geoff says, but I just gotta give it a go

 

[GoAnna!]

Hi Splade

At worst will it work numberwise is pure resi?

If its resi but operating as part commercial do you lose the right to operate as commercial should you let the commercial lapse for any period of time? Has council explained exactly how the zoning works on the property?

There is no need for you to apologise to the vendor. Apart from the fact that he is probably delighted that you bought it you were just straightening out in possible issues in the contract. Fair enough.

Good luck with your venture. I am sure that worst you will learn heaps!

 

[splade]

yes it will work number wise if pure resi, with some work to make the comm part a seperate unit. if just the house it is slightly neg but not too much.

probably would loose the right to act as comm if let it lapse for too long. but i havnt checked that out for sure. that is something i hadnt thought about. thanks for that idea.

 

[XBenX]

http://www.somersoft.com/forums/showthread.php?p=278222