As home staging is an area in which stock can fluctuate and the industry is always growing it is important to always be thinking ahead when it comes to your work space. Having a workspace that is bigger than what you need at the current time and planning for the future is of utmost importance in order to secure your business success and keeping your stock organised and in good shape.
Have you considered purchasing your own business premises?
If you have your own business – big or small – there are some financially rewarding benefits to buying a property from which you can run it. So if you happen to be tossing around the idea of investing in property, it’s well worth considering buying a commercial space as opposed to a residential investment.
There are three types of commercial space – retail, office and industrial. Of course, if it’s your plan to move your own business into the space you are buying, deciding which type of space to buy is a no-brainer.
But buying doesn’t mean you’d necessarily need to move your business premises immediately – in fact there are some sound financial reasons to stay put and rent out your commercial space first. And if there’s already a lessee in the space, you’ll need to be aware of the length of the lease to ensure it will fit in with your own business strategy.
Here’s why it can make sense to lease out your property for a while before moving your own business in immediately.
Commercial property has a much better yield than residential property, which means you are going to get a fatter return on your investment. Compared to about three or four per cent for residential, a commercial property can pay you anywhere from seven up to ten per cent each year.
And of course that means a better cash flow to enable you to service the loan, pay down the loan and, depending on how much you borrowed, leave you with cash you could use as income to help buy another property.
In addition to the income side of things, there are also benefits to commercial property in terms of outgoings. Unlike residential investment, most commercial leases dictate the lessees are responsible for outgoings, such as repairs and maintenance, insurance and council rates. And that means most of the rent stays with you, rather than being used to fund outgoings.
Naturally this comes down to the lease, and you need to ensure you are familiar with the terms before you buy (if there is an ongoing lessee already there), but generally speaking, the lessee is required to finance most things that need to be done on the property when it comes to repairs and maintenance. And that means you won’t be putting your hand in your pocket to pay for things yourself.
Buying a commercial space means you can reap the benefits of owning this type of property as a landlord until it comes time to move in there yourself – for example, when you’ve outgrown the property you are renting, or you’re making a move to a different location as part of your business strategy. This is the perfect time to become your own landlord, which is a great way to pay off your commercial mortgage, just as you would your home.
Today’s cheap interest rates and competitive market could even mean you’ll find yourself paying less on your loan repayments than you were on your rent, giving you more cash flow to invest back into your business.
Additionally, being your own landlord is a great way to secure your future because it means you benefit in the long term from capital growth, as well as from any money you spend on improvements to enhance the asset’s value.
It also gives you the security of knowing your lease won’t be terminated, giving you the flexibility of planning for future business growth.
Buying a commercial property can also be done through your self-managed super fund, which brings about even more benefits (including tax breaks) for businesses. This is something you should talk to your accountant and financial adviser about, because everyone’s circumstances are different and this may not be right for you.
If you’d like more information, visit www.cvgfinance.com.au and we can help you navigate your commercial property purchase.