Commercial Property Blog

Legal Tips and Traps

Should you? Shouldn’t you? – Buying a commercial property

Posted by Ricky Raad on 9 Feb 2017

Assisted by Holly Pitt

Buying a commercial property is a big investment that comes with a series of benefits, but the commitment required shouldn’t be overlooked. If you’ve been thinking about whether or not to make the leap, here a couple of pros and cons to consider before locking anything in.

Pros

Sell it and make more money

The property market in Sydney is booming at the moment, with the Parramatta region in particular set for huge economic growth, as per my blog “The sky apparently is NOT the limit for Parramatta." With all this growth there is potential for your commercial property to increase in value so you could make a pretty penny when you decide to sell.

You’ve got the power!

When you own a property, you have the power. This means design, time frames, fit out, layout, extension plans and all of your dream ideas for a commercial space can become a reality. You have the final say on all decisions which also makes it easier for you to oversee how much is being spent and what work is being undertaken on your premises – stay on top of it and you won’t be blindsided by unexpected costs as you may be if you were leasing.

Cons

Having the money to purchase

As I’ve already mentioned, the property market is booming in Sydney at the moment which is excellent news if you’re looking to sell. However, buying can be a different ball game altogether. Financing commercial property is expensive, with most sellers wanting payments up front. This means that you will generally require a large amount to enter the market.

You’re locked in

Let’s propose that your new business is more successful than you anticipated and you need to move to a bigger premises to keep up with demand. If you have a mortgage to repay, you may end up having to stay in the same location for quite a while, which may limit the ability of your business to grow and expand. Likewise, there’s a chance that your business may not take off the way that you’d planned and you won’t have the flexibility to downsize premises as easily as if you were leasing – not an ideal position to be in if your outgoings are less than you need them to be!

Will you ever stop paying?

Sadly, even though you’ve purchased a property, you will still need to make payments of some sort. Assuming that the property is mortgage free there are still costs associated with all of those amazing changes to the layout and the extension you decided to complete - not to mention the ongoing payments such as council rates, repairs and maintenance costs associated with owning a commercial property.

Where to from here?

There is a lot to consider when buying a commercial property and financing is just the beginning. If you would like to ask more about whether buying or renting commercial real estate is best for your business, please contact: