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Actually you DONT need to register for GST just because its a commercial property.
You have to have an ABN, but you only need to register for GST if your income is going to go over the $50,000 mark.
I have had commercial property for a few years and do not have to be registered for GST. Also the term ‘going concern’ as far as I am aware has a clause that states that where the income is mainly derived from renting the premise…..going concern does not apply. Go to the ATO website and read everything you can to inform yourself before you go ahead. I am of the opinion that going concern is related to the sale of an operating business only.
If someone can prove me wrong please do because i stand to save a lot of money if that is the case.
JodieIn answer to the question REA or self manage I would first ask how close you are to the property?
For example I self manage my properties that are in the same town, but the ones in other towns ie about 1000 km away I have an agent. Its just logistics.I am around my local IPs all the time because they are mostly in one prefered area so if the place started to look bad I would start asking questions
The thing I find most important is REFERENCES. I prefer the company variety so I have a policy of at least 2 references. 1 being rental ref and one employment ref.and I wont accept a persons name because it could be their best friend answering the phone.
And secondly your own personality. Arm yourself with all the information in regard to Residential Tennancy Act and be aware of everyones rights.
Can you be tough if you need to be? What would you do if someone defaulted?
Its not about whats best its about whats best for you.
Jodie
.Firstly…You need to qualify who owns the fixtures and fittings. With comercial properties the tennant, who has a much longer lease than with traditional residential leases, often spends good money to set up the premises to suit themselves. The owner will always be responsible for the maintenance of the buildings themselves and any outbuildings , driveways etc.
Inspections… you can negotiate how often you want inspections done although 3 monthly is probably an unnecessary inconvenience.
There are sopme great benefits in Comercial property… for example the leases are moch longer giving you some security in tennancy. Also the usual arangement is that the commercial tennant pays all the VO’s or various outgoings such as Rates Water Rates Insurance Managment fees etc so the rent you recieve is all yours!!
Regards the purchase…I think different states have different rules but in WA the purchaser pays stamp duty as with residential.GST is dependant upon the structure of the current owners.If they are registered for GST they have to charge it. If they are not registered for GST the cant charge it.
If you are registered for GST you can claim it back. If you are not registered for GST you cant claim it back it just becomes part of the purchase price. However (and you need to talk to an accountant about this) there is a thing called ‘going concern’ that if you qualify changes the GST rules again.
Talk to your accountant.
JodieI have all my finances with the same bank. I like the relationship I have with my manager. I can call him up and ask a question or run it by him…what do you think my chances are…sort of thing. But more than that, we dont have wges and payslips because we have our own business so going to different banks is quite painfull, proving our income, providing tax details ets. The bank we are with knows our business from when we started it 8 years ago to today. I just send my manager my MYOB figures to date and off he goes!I cant imagine the nightmare of trying to reestablish ourselves with a new bank!
JodieGee you really set off a hornets nest didnt you. Some interesting advice / ideas from many angles but I would consider just a couple of things. Firstly you are going to be paying about 6.9% interest on the money you borrow (or there abouts depending on how good your bank manager is). So work out how much interest you are going to pay for the year, then add on your Rates, insurances etc. That is the pigure (roughly) you need to come up with just to cover your expenses. Work out how much rent you can get for the year. Does the rent cover the expenses???
DONT FORGET…IF ITS SHORT YOU WILL BE PAYING THE DIFFERENCE OUT OF YOUR OWN POCKET. Loosley this is whats known as negative gearing because there are some tax deductions to be had in the difference between what the property brings in and what you pay out. Now unless you are on a fairly good income and paying Tax in the highest bracket you need to have a think about wheter the tax deductions are worth it.Even in the highest tax bracket you have to spend 100 to get back 48.Now if the property will support itself or you can value add in some way to improve the income then you are well on your way to investing well.
Now I am no accountant but have had a few properties over the years. I have converted some of my units into holiday accomodation which turns a $150 PW property into a $400 pw property. I spruce it up, add furniture and cuttlery and all the things you would expect in a holiday place and list it with the local tourist bureau.
There is more work in it of course because it has to be cleaned and have linnen changed each time your guests leave. It is also empty more often but mine are near the beach so theyre full about 70%of the time.
What I particularly like about this way of doing things is that I get to be far more hands on. I get to see, clean and garden my property regularly and I dont have ‘Tennants’ I have ‘Guests’. There is a legal difference.You may not be in a position to do it that way, Im just saying that there are many ways of Value adding. This is only one of them.
The most important thing is affordability. As some wise people have pointed out we are now on the downward trend and if you got financially stuck the likelyhood of being able to sell in a hurry for a capital gain, is going to be substantially lower in the current environment.
I believe that if you choose your rental property well there is still good money to be had in investment properties and long term ( a few years) we will eventually have an upturn again which is where your capital gain comes in.
The sectret is buy in downtime…never sell in the same part of the cycle.Now someone will probably prove me wrong!!!!
I have something to add tho. They have been promising the extention to Marmion Ave and or the Freeway for as long as i can remember. I grew up in between Wanneroo and Yanchep where the old Lion Park used to be and they talked about the new highway back then
I bought my very first property in Yanchep. 15 years ago. I paid $7000 for a 800sqm block just behind the primary school and sold it 3 months later for $17000 +. I came out with my first ever $10,000 I had ever owned!!
I currently have property in Karratha & Geraldton, all of which have doubled since I purchased them only a couple of years ago. I also have a commercial property in Karratha returning 9.2% on 3 + 3 yr leases, which I am looking to sell to fund my next venture if anyone is interested.
Go Gero!! I live there now and luv it!Jodie
Ive always faxed O & A contracts back & forth in WA Find out if the property is listed with any other agents and go thro them instead. Let them fight it out for their share of the commission.
Jodieno I am definitely not an agent. I also no longer live in Karratha so its a bit more difficult than just showing inerested parties around the place. I thought the net because I could put photos and details up front for people to consider BEFORE I have to jump on a plane and fly over, which would still be cheaper than paying agents their 15k or so.
I have sold numerous times before privately but usually I was at least in the same part of the country at the time.In fact ive only sold through an agent once.
JodieAfter her car got broken into in the parking area my tennant decided to move out. I gave my tennant an inexpensive electronic car alarm and she stayed another year!!
If your interested in tree investments, we did the same thing a few years back and got a 100% tex deduction on our purchase. Were very happy with the whole affair and now 6 or 7 yrs later were getting closer to our investment returns. Try Pawlonia Forrests we were quite impressed by them.
Yes I agree with geraldton and Karratha. I have investment properties in both and get very good rent returns as well as capital gains.
