Hello everyone,
I would be thankful to you all for your opinions and advise…
I have a residential property on busy road in melbourne east..I am planning to convert the property into commercial property.
What things I need to consider and is it really viable to do so, Also what does the whole process involves.
when I say commercial property I mean a surgery or dentistry or medical centre kind off.Any advise or suggestions.
Currently on property is a 3 bedroom house.
Land area 650 sqm.Thanks in advance to everyone…
Firstly, just because it is a busy road does not mean it is zoned commercial.
Secondly you will need to rip out the kitchen & bathroom and install a tearoom, toileting facilities etc. upgrading power & phone
Yes check your zoning. In some zones you need a permit to use your property as a medical suites/consulting rooms, while in others it’s not allowed at all. Check with your local council at the very start.
Just be wary though of how banks value these type of properties. Make sure – and I can’t stress this enough – that you keep the property looking like a house!!! Don’t make it look like an office building! Otherwise it will be valued purely as a commercial property! If the property looks like a house, a property valuer will value it as such, but deduct the cost of restoring the property to be a house again (putting in showers, kitchens etc). This gives you a far better result than 100% commercial – plus medical suites are very, very specialised if they’re purposely built so try and avoid it so you don’t destroy value.
Thanks Aaron And Scott..Many thanks for your opinions.
I would like to ask Aaron. I checked with coucil property is in zone 1 which means I can convert that into commercial
But as you said I can make out, converting property into commercial might lower the property value so You mean to say it is not a good idea to convert it and just leave it residential property.
Is there anyother better idea I can do if I do convert into commercial what sort of ppl and market I should be thinking of getting in
Thanks again for your ideas..have you done the numbers and checked that it would actually be more profitable to convertit to commecial than just leave it as resi?
A commercial property is not necessarily worth less than a residential property. It’s just that they are valued differently. Commercial properties are valued by the rental that they are (or expected to) achieve, divided by a yield rate. This yield rate varies from 6-8% depending on the property.
With residential, the property is valued on the basis of comparable sales only and not on yield. So if your expected rental from the medical suites is not that much higher than renting out the place as a purely residential house, you may actually get a lower value.
As mattsta identified, it depends on your figures. If the rental from the medical suites is much, much higher then it’s something I would definitely consider – keeping in mind to keep the place looking like a house in case you change your mind/tenants leave in the future.
Thanks a lot Matt and Aaron for your help and everyone else..Much Appreciated after woking out I think I will just keep it as a residential property..Thanks again…
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