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
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
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
nice. same thing iam doing at that moment
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
Just like stated above you need to talk to insurance brokers since your insurance rate will be high. Good luck!
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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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
Email Me | Phone MeResidential and Commercial Brokerage
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