To Buy Or Lease Commercial Property

Considering buying commercial property to lease to spouse to grow business.
Would prefer leasing but finding it difficult to find something suitable in terms of outgoings and size.
Is it a waste of time in terms of tax effectiveness to buy at all?
 
Does that mean otherwise not?

Spouse currently subleases at 30% of all earnings but restricted in growth of income due to sharing premises times/ scheduling etc.
 
Outside of super it's great but you have to make sure you are there for the long-term obviously and make sure you have enough capital to buy it plus fit it out and conduct business.
 
Again looking Western Suburbs of Perth, not easy.
The impression I get is the agents just drip feed the supply side even though they aren't really selling or leasing like hotcakes.
No experience in commercial and not having any luck finding anything online and I am getting the distinct impression it's a bit more of a "who you know" than Residential.

The other thing is if we feel we could double my spouses income by buying commercial and we don't need to drastically upgrade to new PPOR in the next 5 years, we would be better off going the commercial route right?
 
You have to look at it logically. There is a reason why even big businesses like Woolworths etc don't own their buildings - it requires a LOT of capital to do so which can restrict how you can grow. However, if you are in a position to a) buy the comm property, b) have enough funds to grow your business, then I would do it. If you lack one or the other, you are better off renting.
 
You have to look at it logically. There is a reason why even big businesses like Woolworths etc don't own their buildings - it requires a LOT of capital to do so which can restrict how you can grow.

Aaron, Woolies is a bad example as it does own buildings (at least for a period. Woolworths, generally develops their own sites within one of their many land holding vehicles. Once developed they either sell off market to another of their trusts or sell at auction with 20+ year leases. Lane Cove Marketplace was one of these. By developing their own property they generate additional profit to be used in the business (attractive to buyers as it is a fully leased investment with ASX tenant).



However, if you are in a position to a) buy the comm property, b) have enough funds to grow your business, then I would do it. If you lack one or the other, you are better off renting.

Buying the property (not as a company asset) does have its advantages. If you ever outgrow it you can lease it to someone else, sub lease if it is too big for your needs etc. Providing that your wife's business is a separate entity (eg PTY LTD) then you can enter a lease with her company and essentially have the business pay the loan etc.
 
Would one want to be borrowing as little as possible with a Commercial property though?

We have 1 IP positive geared( Value approx $400,000, owing less than $100,000) and 1 PPOR with significant equity ( Value $650,000 owing $400,000 )
 
I also like the subleasing to other parties option and maybe even going slightly bigger to offer other revenue streams, another string to the bow so to speak.
 
Depends on the business..

Is the business reliant on the size of the property to grow?
Are you intending to grow the business rapidly?

If yes to either of the above, I would advise against buying, but would suggest leasing.
 
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