I would be grateful for your opinions on the following scenario which is currently afflicting me.
I have just been given three months notice to vacate by my landlord with regards to my small business premises. This is actually generous as my lease has long expired. I have been present at these premises for almost five years. My landlord is actually a competitor in the same type of business. I would prefer not to divulge my exact type of business but I am a sole trader with two part time staff. The business does involve a lot of customers coming into the premise and requires face to face contact, so it must be easily accessible. Geography is important as the business is somewhat geographically dependent in terms of customer base.
Hence I am in the process of buying a new business premise in a hurry. This speed is new for me as I tend to be prone to endless paralysis analysis but I have already made a few offers on various offices 6.5km away from my current premise and will aim to exchange in the next week or two. I need to move at this speed because I do not wish to have interruptions to my business. I would aim to negotiate early settlement so that some basic fitout -computers, phone, furniture, fax, can be installed. The opportunity cost of lost business runs in several thousand per day.
I do not wish to lease again under any circumstances because the feeling of sudden eviction is awful and I do not wish to ever experience it again. And also every move in business premise is very costly in terms of business lost, loss of customers, downtime and the general inconvenience / stress.
I have made offers on two office spaces / suites within a multi-story/multi suite strata-ed building. The 80m space is just enough for me at present for one staff and myself. The 170m space which is just two doors down is far more comfortable and will allow me to bring in a business associate down the track if required. I have made offers based on a cost of about $4500 per square meter.- approx 360k- 400k for the first and max 800k for the second. This reflects sales in the past 12 months. Strata fee is about $7000 for the first space and $15000 for the second space. The building is about seven years old and has a reasonably low vacancy rate. When the building was first built, the sales were about $6000 per sqm.
Currently, the 80sqm property is listed also listed for rent at 35000 p.a. and the 170sqm property has tenants on expired leases at 9% gross yield. Both have reasonable fitouts so that I do not have to do anything major. I would need to install wash basins into either suites. I would need to buy new computers / phones / faxes / printers / scanners -the relocation cost will come to about 100k minimum.
Since I received eviction notice three days ago, I have asked the accountant to set up SMSF. I want to buy using SMSF because I will be using the premises for my business.
I have 150k in first state super. This will take time to transfer into SMSF. Once the SMSF account is set up, I can add 25k concessional contribution this year and 450k non-concessional contribution.
If I buy the 400k property, the SMSF should cover it. If I buy the 800k property, the SMSF will need to lend from me. I will put the balance of approx 200k into smsf account from my online saver account.
I am awaiting an acceptance by a vendor on either property and will proceed. They talk about distressed sellers but I am a distressed buyer - forced to buy! But I have not told agent about this obviously!
Under other circumstances, I would not buy this office suite as I do not believe that they are good investments.
I have organised a conveyancer locally who has given me a quotation of 1700k for her fees plus disbursements. They will do strata report.
I would be grateful for any pitfalls / issues /insights into the above situation and how I can minimise damage to my financial position.
I have just been given three months notice to vacate by my landlord with regards to my small business premises. This is actually generous as my lease has long expired. I have been present at these premises for almost five years. My landlord is actually a competitor in the same type of business. I would prefer not to divulge my exact type of business but I am a sole trader with two part time staff. The business does involve a lot of customers coming into the premise and requires face to face contact, so it must be easily accessible. Geography is important as the business is somewhat geographically dependent in terms of customer base.
Hence I am in the process of buying a new business premise in a hurry. This speed is new for me as I tend to be prone to endless paralysis analysis but I have already made a few offers on various offices 6.5km away from my current premise and will aim to exchange in the next week or two. I need to move at this speed because I do not wish to have interruptions to my business. I would aim to negotiate early settlement so that some basic fitout -computers, phone, furniture, fax, can be installed. The opportunity cost of lost business runs in several thousand per day.
I do not wish to lease again under any circumstances because the feeling of sudden eviction is awful and I do not wish to ever experience it again. And also every move in business premise is very costly in terms of business lost, loss of customers, downtime and the general inconvenience / stress.
I have made offers on two office spaces / suites within a multi-story/multi suite strata-ed building. The 80m space is just enough for me at present for one staff and myself. The 170m space which is just two doors down is far more comfortable and will allow me to bring in a business associate down the track if required. I have made offers based on a cost of about $4500 per square meter.- approx 360k- 400k for the first and max 800k for the second. This reflects sales in the past 12 months. Strata fee is about $7000 for the first space and $15000 for the second space. The building is about seven years old and has a reasonably low vacancy rate. When the building was first built, the sales were about $6000 per sqm.
Currently, the 80sqm property is listed also listed for rent at 35000 p.a. and the 170sqm property has tenants on expired leases at 9% gross yield. Both have reasonable fitouts so that I do not have to do anything major. I would need to install wash basins into either suites. I would need to buy new computers / phones / faxes / printers / scanners -the relocation cost will come to about 100k minimum.
Since I received eviction notice three days ago, I have asked the accountant to set up SMSF. I want to buy using SMSF because I will be using the premises for my business.
I have 150k in first state super. This will take time to transfer into SMSF. Once the SMSF account is set up, I can add 25k concessional contribution this year and 450k non-concessional contribution.
If I buy the 400k property, the SMSF should cover it. If I buy the 800k property, the SMSF will need to lend from me. I will put the balance of approx 200k into smsf account from my online saver account.
I am awaiting an acceptance by a vendor on either property and will proceed. They talk about distressed sellers but I am a distressed buyer - forced to buy! But I have not told agent about this obviously!
Under other circumstances, I would not buy this office suite as I do not believe that they are good investments.
I have organised a conveyancer locally who has given me a quotation of 1700k for her fees plus disbursements. They will do strata report.
I would be grateful for any pitfalls / issues /insights into the above situation and how I can minimise damage to my financial position.