Making the bold decision to step into the highly profitable world of Australian commercial real estate is a noteworthy achievement for any potential business owner or investor. The golden rule here is to always remember that the rules associated with buying a commercial property vary significantly from those of buying your dream home.
When you’re buying a house, you’re essentially buying a home, whereas a commercial property serves as a functional business asset. With this in mind, the best way to approach the purchasing process should involve the specialised services of the commercial real estate agent Essendon investors trust and rely on.
Understanding Why You Need an Expert Commercial Real Estate Agent
Easy access to the wonderful World Wide Web, combined with tons of online how-to guides and tutorials, can easily leave you convinced that you could source, negotiate, and eventually buy your first commercial property all on your own. However, it’s not uncommon for first-time buyers to become entangled in all the admin and red tape or even struggle to find appropriate listings to begin with.
Fortunately, you can avoid all the hassles and potential pitfalls encountered by many commercial property buyers by simply enlisting the services of a certified real estate agent. Experienced commercial real estate agents will assist with all of the following:
- Finding and accessing advertised and exclusive off-market listings
- Negotiating on your behalf to secure the most favourable purchase terms
- Sharing local market trends and making relevant suggestions
- Reducing potential risks associated with high-stakes negotiations and transactions
- Assist with and manage property searches and general evaluations
- Guide to help you navigate red tape, admin, and the application process
Use Expert Advice to Streamline the Purchase Process
In addition to finding a real estate agent that specialises in buying commercial properties, our experts also want you to keep a few tried and tested tips in mind during the buying process. Keep reading as we share them.
Tip #1: Understand the Zoning Laws
The most common mistake first-time buyers make is to disregard local zoning laws. This happens when you assume that a potential property can be used for any type of business. It’s essential to highlight that, in Australia, local councils have specific zoning laws that determine what can and cannot be done on a specific premise.
These zoning laws are what determine whether a property can be used for retail, industrial, or warehousing purposes. It’s these laws that ensure that a toxic chemical business doesn’t pop up next to your favourite restaurant. Real estate agents suggest conducting what’s known as “usage due diligence”. This involves looking for buildings suited to your end goals.
Tip #2: Make Provision for the Commercial Gap in Financing
It’s essential to highlight that financing a commercial purchase is more demanding than a traditional mortgage. This means that most Australian lenders will usually require a minimum deposit of at least 30% to 40%, which is considerably higher than the average 20% for residential purchases.
In addition to this, loan terms are shorter and interest rates are higher. This means that it’s imperative to get pre-approved for any potential loans before you begin the searching process. This will save you time and aggravation in the long run.
Tip #3: Understand the GST and Going Concern Rule
It’s no secret that in Australia, the Goods and Services Tax (GST) is generally applied to almost all commercial transactions. When this happens, you may be required to pay as much as 10%more than your initial purchase price.
However, a loophole that first-time buyers may not be aware of is the “Going Concern” exemption. This means that if the property is currently being sold or leased as an active investment, your purchase transaction may be GST-free. Ultimately, this will go a long way toward saving you thousands of dollars in upfront cash flow. Keep in mind that this requires both the seller and buyer to be registered for GST.
Tip #4: Never Underestimate the Power of Off-Market Deals
Another tip that many first-time buyers don’t know is that the best commercial properties often don’t make it to popular market listing sites such as CommercialRealEstate.com or Realcommercial. These properties are sold off-market through the real estate agent’s private network to pre-approved and ready-to-purchase buyers.
Getting access to these private listings is only possible if you’re aligned with a professional commercial real estate agent who will help to assess your buying mandate (asset class, location, and budget). Having all your proverbial ducks in a row before you make the offer will ensure that you have a fighting chance of landing the commercial property you have your sights on.
Final Thoughts
Investing in commercial property in Australia is one of the most lucrative ways to build wealth. If approached correctly, this process will offer high yields and see you earning the title of professional investor in no time. It all starts with finding the best commercial property real estate agent and using our expert tips to make the process as easy and effective as possible!