What You Need to Know When Buying Commercial Property: Canberra

MMJ Real Estate
What You Need to Know When Buying Commercial Property: Canberra

A Q&A for Buying Commercial Property in Canberra

Are you a newbie commercial property investor? Don’t worry, we all were at some point. If you’re thinking of buying your first commercial property in Canberra, you’ve probably got lots of questions. This is good. This is smart. Buying a commercial property in Canberra (or anywhere!) is a big investment. It’s a good idea to do your homework first so you know it is the right investment choice for you and that you are going to see good ROI - after all that’s the end goal isn’t it!

MMJ Real Estate Canberra have over 40 years experience in commercial real estate. In that time we’ve seen and heard it all. We know what commercial property investors are looking for, what their concerns are and what kind of questions they have when taking their first steps into commercial property investment in Canberra. Thankfully, because we have specialised in commercial real estate for such a long time, we have the answers to all your FAQs!

FAQs When Buying Commercial Property in Canberra

Do I need to pay GST on top of the purchase price for commercial real estate sales?

GST does apply when purchasing a commercial property. It is added to not only the purchase price, but also rent received for the property and any expenses incurred. You may be eligible to claim credit for these expenses. The ATO has more information about this on their website.

Are there specialist commercial property conveyancers? Or can I use any conveyancer when buying commercial property in Canberra?

You are able to use any conveyancer. However, it is recommended that you choose a conveyancer who is experienced and knowledgeable about commercial property sales. And any conveyancer you choose should be licenced with NSW Fair Trading as required by law.

Do strata fees exist for commercial property in Canberra?

Strata title is whereby a property is divided up and individuals own part of that property, with the common areas owned by the group of individuals under a body corporate arrangement. Strata title was more common in residential real estate, but commercial strata developments are beginning to pop up more frequently. Commercial properties in Canberra which fall under strata title will incur a strata levy and the property owner is liable for this fee.

What kind of deposit do I need to buy a commercial property?

Strictly speaking, commercial properties require a larger deposit than that of their residential counterparts. In most cases, a deposit of 30% of the purchase price is required to secure a commercial property loan from a lending institute.

What kind of rental returns could I expect for a commercial property in Canberra?

This is really dependent on a number of factors some of which are: the type of commercial property (i.e. retail, office, industrial, etc…), where the property is located (i.e. CBD or suburbia), and the size and condition of the property. For example a small office suite in the Canberra CBD could lease for $2500 + GST per month, whilst a retail space in Woden may lease for $1600 + GST per month.

How much would I expect to pay for property management for a commercial property?

This will really depend on the property so it is best to get in touch with the MMJ Real Estate Canberra team who can give you quote which is customised to your property.

Should I organise a building and/or pest inspection for the commercial property I am thinking of buying?

Purchasing a commercial property in Canberra is a big investment. As you will be responsible for any issues relating to the structure of the building you will gain peace of mind knowing that when you purchase the property there are no serious structural flaws in existence and that the building complies with commercial building regulations. Therefore, it is a good idea to organise a building and pest inspection before signing contracts. It is recommended you pick an organisation who specialise in commercial property inspections.

What is a CAP rate and how is it calculated?

CAP rate stands for capitalisation rate. This is a ratio which identifies the percentage return an investor will receive for the property. It is calculated as the net operating income (NOI) / the property asset value.

E.g. For a property listed for $1,000,000 which has an estimated NOI of $100,000 the CAP rate would be calculated as $100,000 / $1,000,000 = 10%

Who pays for expenses such as council rates, insurance, fit outs, utilities and the like?

When it comes to commercial property in Canberra, the tenant is usually expected to incur costs associated with council rates, any required fit outs, utility fees and any other maintenance costs. They are also responsible for purchasing insurance for their contents within the building.

As a landlord, you would be expected to purchase insurance for the building itself (the structure) and also liability insurance to protect you should someone be injured on the property.

Occasionally, a landlord may offer to pay for a tenant’s fit out if the tenant agrees to sign a multiyear lease.

The commercial property I want to buy already has tenants. Can I evict them and move in myself or find new tenants?

Generally, existing tenants leasing the property are entitled to stay for the duration of the lease so long as they are still paying rent.

 

Looking to purchase commercial property in Canberra? Browse our portfolio of commercial real estate for sale in Canberra and surrounds.

Still have questions? Or need some help navigating the commercial real estate market? Get in touch with MMJ Real Estate Canberra - we’re here to help!

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