Buy Commercial Property - FAQs
If you’re looking to buy commercial property in Melbourne, it’s important to understand the costs, risks and potential returns before making a purchase. This FAQ page answers common questions about buying commercial property, including GST considerations, expected returns, and occupancy costs like outgoings and land tax. Whether you’re a first-time investor or expanding your portfolio, this guide will help you approach your next acquisition with confidence and clarity.
In real estate terms, this is a ‘going concern’, meaning an occupant/tenancy is in place, under a lease agreement, trading within the premises, which meets the ‘no GST’ applicable clause. GST is payable on all sales unless otherwise indicated in the contract of sale or unless your accountant has suggested otherwise.
When a purchaser intends to purchase an investment property, a variety of factors must be considered to evaluate what rental returns are expected or what returns are being offered for the initial investment. More often than not, economic influences affect returns, as do the type of business trading in the premises and in what industry; what plant and equipment has been installed and/or investment has the trading business done in the premises to enable it to trade; is the business profitable and does it have a good trading history/reviews with their customers; is the business paying its occupancy costs on time; what is the age of the premises and are there any expected capital expenditure costs known. Once this information is collated, the return on your investment (ROI) will make more sense. ROI is a good reflection of risk, and at CPN, we provide fair and honest advice on present ROI expectations. We can also offer advice for those ‘too good to be true’ investments that promise above-market ROIs but may be hiding this, and that will affect your overall investment.
Most buyers are cautious when purchasing commercial property and, more often than not, are not entirely aware of what overheads may or may not be their responsibility. These questions are widespread and are sometimes missed in the excitement of purchasing. Still, it is necessary to understand who is responsible for what, especially if a property is being purchased for investment and how long it will take to find a suitable tenant, which ultimately means how long you will need to be holding these costs.
