All Topics / Commercial Property / Commercial versus Residential

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  • Profile photo of dlanddland
    Member
    @dland
    Join Date: 2012
    Post Count: 6

    Hi All

    I was wondering if you can help me with a deal I am currently looking at I am in the contract/offer  stage of purchasing two houses on a single block (Zoned Res) in QLD. The property is currently being run as a boarding house with good return. The business forms part of the sale as the owner wishes to retire. Important to mention the business doesn't form part of the sale price. The sale price is for the property only so you could close the business and develop if you wished.

    The contract from the agent is a residential contract , boarding houses are not considered residential but rather commercial from my understanding. This type of property is also considered commercial residential according to the ATO  and treated as a commercial property purchase for GST purposes meaning GST will be payable. My question is would this be betteras a commercial sale rather than residential.

    Any advice would be much appreciated.

    Thanks in advance

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    There has been a fair bit of discussion about boarding houses on these forums – search boarding house and you will see.

    Be wary of how council treats it, and that few insurers will touch it.  In other words, your holding costs might be higher than you expected.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
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    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of stevepaulstevepaul
    Member
    @stevepaul
    Join Date: 2012
    Post Count: 1

    nice. same thing iam doing at that moment

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    A couple of other points worth thinking about prior to proceeding to Contract:

    1) Lenders do not like boarding houses at the best of times and it treated as a specialised security. Definately be a Commercial lend but you might even find slightly more restrictive that that.

    2) Ever since 'Childers' insurance companies have ran a mile from such properties and those that would cover it are    going  to want to charge accordingly. Check with a specialised insurance broker what options are available to you.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of mattstamattsta
    Participant
    @mattsta
    Join Date: 2011
    Post Count: 604

    Just like stated above you need to talk to insurance brokers since your insurance rate will be high. Good luck!

    Profile photo of Mick CMick C
    Participant
    @shape
    Join Date: 2010
    Post Count: 1,099

    Boarding houses with management right and short term rental will be treated more like a "business" loan rather then a commercial loan; so if your after a true "boarding" house with less hassle- aim for one with medium-long term residental  rental rather then your "motel/backpackers style" boarding houses. 

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
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    Same Banks. Better Rates. Served With a Passion.

    Profile photo of TheFinanceShopTheFinanceShop
    Participant
    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    Its not that black and white and it depends on a number of things. I have done a few under resi and 2 under commercial. Many banks will not accept boarding houses as satisfactory security so you would need to go with a specialised lender.

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
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    Residential and Commercial Brokerage

Viewing 7 posts - 1 through 7 (of 7 total)

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