Which scenario would you choose?

[Kara47Participant@kara47Join Date: 2012Post Count: 28]

February 7, 2013 - 8:32 am

Hello All,

I am a self employed Health Professional in a country town. I'm looking to purchase a property in 6 – 12 months which can be used as a clinic for myself & sublet 1 or 2 rooms to other Health Professionals. I plan on keeping the property long term, mainly for cash flow. I would need to live in the property for 12 months to meet FHOG requirements.

The current options are:

1. Older style renovated house in good condition, purchase price $230,000, 5 bedrooms, zoned General Business. It is located in a side street about 200m from the present business district, which is gradually becoming innudated with health professionals.

2. Build new home in residential area ( prime location in town but outside CBD) for $350,000. There are some existing home businesses in the area. Have spoken to council, need to meet parking provision, access & toilets for clients ( which I had factored in anyway)

My thoughts are: the older property could be paid off quickly, to allow purchase of another property. There would be little or no depreciation to be claimed due to age (?)

The newer property would be depreciable, but higher repayments.

Any other factors I should consider?

Thanks,

Kara.

[DerekMember@derekJoin Date: 2004Post Count: 3,544]

February 9, 2013 - 3:15 am

Hi Kara,

Some other things to consider are;

1. which location is most suited to your (potential) clients?

2. are there complementary professionals in both areas?

3. would an older/newer property be more consistent with normal expectations of premises in your health field?

4. is the population moving thus making one locality more desirable, long term than another?

[Kara47Participant@kara47Join Date: 2012Post Count: 28]

February 9, 2013 - 6:10 am

Thanks Derek.

[TheFinanceShopParticipant@thefinanceshopJoin Date: 2012Post Count: 1,271]

February 9, 2013 - 8:54 am

If the net operating cost per month of the new building is more than the older building then depreciation isn't really a benefit right? It is the same concept of negative gearing. 

Have you done the numbers of both properties and weighed this up against the CG potential?

Regards

Shahin

TheFinanceShop | Elite Property Finance
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[RPIParticipant@rpiJoin Date: 2012Post Count: 308]

February 9, 2013 - 10:13 am

Hi

I would also suggest looking at the zoning of the land and the neighbouring land.  If you can find a residence that is next to a commercial use or is on a main road that would help from a rezoning perspective.

Also suggest that you don't own the building in your own name and ensure that there is formal leasing in place to separate the business from the ownership.

As an aside, are you up with the ACCC's position on price fixing between health professionals operating out of the same premises.  Easy to breach if you use your own provider number yet all the clinic charges the same, however, an application to ACCC can allow the anti-competitive behaviour due to the public interest factor.  

regards

D

RPI | Certus Legal Group / PRO Town Planners
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[Kara47Participant@kara47Join Date: 2012Post Count: 28]

February 10, 2013 - 4:07 am

Thanks Shahin,

I still am looking at costs to build new, will gather more information.

[Kara47Participant@kara47Join Date: 2012Post Count: 28]

February 10, 2013 - 4:17 am

Thanks Darryl,

I have spoken to Building Dept rep. from the council, I don't need to rezone, just meet their requirements for parking/ toilets etc. If I build new I would probably share with one other Health Professional.

Thanks for the tip on ownership. I am a sole trader at present, so this may need to change in the near future.

I am aware of the ACCC ruling, it is amazing how often it is breached. All the multi practitioner clinics I have visited/ worked in bill the same for each practitioner, so the ACCC could have a field day!!

I plan on subletting to different Health Professionals from my Allied Health field. They would be free to set up their own price structure. I'm undecided at this stage about providing reception services or let them share the reception area & provide their own staff.

Cheers, Kara

[RPIParticipant@rpiJoin Date: 2012Post Count: 308]

February 10, 2013 - 6:43 am

Hi kara

If you bill in your own name, a service trust which employs the reception staff, supplies the equipment etc and bills you the same as the other professionals may assist in asset protection and tax planning.

Yes is a lot out there and I personally think it is taking competition law too far.  A lot of people do seek authorisations though.

RPI | Certus Legal Group / PRO Town Planners
http://www.certuslegal.com.au
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Property Lawyer & Town Planner