My Commercial Purchase.

Well done to you and your wife PB. Your frank sharing of numbers and the story of the transaction is a great learning lesson for everyone here.

As well as fabricating and manufacturing going on inside industrial properties, the biggest take home and point driven home is that a large degree of manufacturing can go on outside with the contract, deal terms and the end use, which in your case has created a potential home for your business whilst enjoying the rent saving in/out of SMSF. Money and value created out of thin air.

Good luck moving forward.
Thanks for sharing

 

I share the numbers in detail in full, because it represents the whole transaction, and what goes on to get from site seen to site settlement. Some 'developers' have a knack for showing lack of detail, which doesn't represent the deal in its full form. Its very disturbing if you cant give full representation of numbers in full, then expect a following or 'mentorship'.

pinkboy

 

This whole purchase was extremely calculated, whilst being within all the SMSF rules, and creating a win/win/win/win for LL, tenant, lender and ATO. It just so happens that I am 2x of the winners here!

pinkboy

 

Getting extra money into the SF is also a great bonus with the caps likely to only stay small from now on for contributions. Not just a great property deal but also a very clever taxation move.

Well done mate!

 

That's a great result, thanks for sharing.

Alot of hard work involved!

We have been looking for a commercial property for investment the last 3-4 months so we understand how difficult it is to find a "good deal" that doesn't have a hidden reason for being too good to be true. Almost ready to give up but putting it on hold and looking at other options.

Nice work and time to enjoy the results for years to come

 

Well played. Not just calculated but well strategised. Despite your young age, you have utilised a nominal deposit to achieve tenure for your business (and/or maybe another tenant also), not only saving you money in your business but creating forced savings through your SMSF. Member contributions could change half a dozen times by the time you are ready to draw down income from your SMSF and by that time the loan you have taken out will be so trivial so as not to matter.

Some people bag SMSF's for those under 40, however we started ours when I was 36 and I am 5 years away from TTR status. I don't agree with people piling everything into super however, a little bit here and a little there, a little bit in personal names with debt, and a little bit in family trusts covers the entity scenario well and also diversifies the law makers affecting every ownership category at the same time. Politicians do care about there own nest eggs too, so I don't foresee too many stringent changes to SMSF's however having a bit in different ownership structures (and different states for land tax) creates an all weather portfolio structure IMO.

Those in their 30's take note of what Pinkboy has managed to create. Many lessons in this thread for everyone, both experienced and novice.

 

There should be more commercial examples on PC like this. Surely others are doing this, but not publishing the numbers? I miss Dazz, despite his cryptic posts and sarcasm, he was a wealth of knowledge.

 

Hi Dan
Are you similar in that your business could occupy said property, or were you considering passive investment only ?
I reckon the game is that much harder if you have little or no influence on the type of tenancy. eg If my business required a warehouse I'd feel a lot more confident about buying a passive warehouse investment in my own city. Similarly if I was an office-based business owner I'd probably lean towards an office that I could occupy if push came to shove. What's your thoughts ?

 

Thanks for the kind words.

I didn't get here alone though. I'm not the brightest crayon in the box, but one thing Im good at is the basic life skill that many people just don't get. I watch, I listen, I see, then I put my hand out to touch - and all of a sudden, I grab it with both hands and dance.

I would not have got here without some very creative people. I have an excellent Accountant (and his Junior accountant), very savvy team of solicitors (yes 'team' - a Principal solicitor, a Junior solicitor, and their assistant), my very true friend who invests in commercial property when he's not being a Magistrate (Coroner), and several other people who I ride with, where I get some bibs and bobs from. Also, what has been instrumental, has been the crew in the chat room - who we have all been bouncing ideas around and networking our collective wisdom, strategizing, and generally bettering each other in our forward quest for wealth.

@Player , I (ok, Im copying another forum member's idea) have even devised a plan which may see us use the SMSF as a tax saving vehicle, for some future funds moving in and out (legally of course) well before Im 70. I guess once implemented myself after seeking some clarifications, perhaps will share the scenarios.

pinkboy

 

This is the first time I've seen anyone clearly publish the numbers and the strategy in relation to a commercial property.It is a very informative post.

Commercial property interestd me too and like @Foxy *****, I wonder whether to stick with the type of building/business structure with which I'm most familiar. Or how do you find out what is most needed?

 

Agree.
Great Job all round Pinkboy.
Are you able to give a blow by blow description as to how you got them to the final price of $850k+gst ? Would be interested to know.
ie Did they have a listed asking price of $1.3m or something and what sneaky tactics did you use to beat them down. eg did you play the asbestos card or anything similar ?
To your knowledge was there interest from any other party ?
Cheers

 

Hi Foxy

I'm buying for investment.
Yeah its quite hard to find one with a good lease.

One thing I'm looking at though is buying business + property, rewriting the lease in favour of me, then selling the business.

Seems to be a technique the vendors I've seen had used and were trying to sell the over valued properties to me with excessive rents (which would go down on market review).

But I have alot to learn

 

Wow I just read this - congrats looks like a great buy.

Also I'm sure you know this but its a massive achievement by your broker or banker to get finance for you that quickly. 21 days for a commercial purchase is incredible.

 

Thank you for writing all the details of your successful purchase. This is a great post @pinkboy! I found it valuable learning.

 

The listed price was $950k+GST. As I said in my OP, the price blew me away because I knew the site having been in there and know what property of this nature costs having investigated building myself etc.

There is no real juice to the story regarding the price negotiations. Initially I wanted them to sign me up to a lease, then sign a sale contract the next day. Initially I offered $770k+gst with this condition, but they flat out refused to even deal with me. I didn't think the price was that insulting knowing the sales were down in Mackay. I was also negotiating this property at the same time: 6-8 Success Street, Paget, Qld 4740 - LEASED Industrial/Warehouse Property #501637225 - realcommercial.com.au . I was almost ready to pull the trigger on this property @ $820k+GST, but he was also trying to negotiate a lease behind the scenes. I was also not 100% on this property because it was on the other side of town, and I might have lost all my good little clients where I currently am.

I got a call from the other agent of my purchased property.

I was asked if I could go $900k. I flat out said no go, the $770k+GST was all I had. A couple of days later I was again called, and the agent said that the vendor would consider $850k+GST if it could be settled before Christmas. This is when I went into overdrive. I came back to the agent and said it was impossible to settle before Christmas, but we could go unconditional by Christmas. The message was relayed, and they agreed. Finally. I had to call in a few of my debtors to say I was working on a bit of a project, and one of my major ones who I had just completed a rather large job for obliged and paid me in full that day (an amount roughly equal to the GST required and the SD (I got a few good clients ). So, all agreed by phone call, but that doesn't mean $ hit in Queensland. After many emails too and from agents and this is when my solicitors got involved with their solicitors because theirs were not up to speed how things worked in Queensland...we finally got a signed contract.

In hindsight, it was a 50% emotive purchase, 50% business purchase. I really wanted to stay on this side of town, to keep the customers I have here ^^ especially old mate who came through with the solid funds. We have 12mths work in front of us with him at the moment. He's extremely painful to deal with, but he never questions cost, and pays well.

So yeah, it could have all been different, but the way it has turned out, will work well right into the future for us.


pinkboy

 

Take a look at the poor ba$tard:

pinkboy

 

Quality photoshop Pinkboy - you've clearly got a fallback career setup.

A very interesting deal in the end, it was great to be a part of it. The numbers stack up very well as an investment and for the business - it's great this is on the forums to help others understand what they can do within the commercial space AND with their superannuation.

 

That's all well and good, but can he build a fence?

 

Your broker is in Adelaide???

 

It doesn't matter where your broker is, 3km, 3,000km - its all done by scan and email anyway.

I used Corey for this because we have spent many hours on this deal, but more particularly on investment strategy in other areas including business ventures, other commercial interests, financial sectors and even some discussion on more obscure wealth creation. It's awesome to bounce ideas, dismiss anything that looks precarious, create opportunity.... all down to earth, not this airy fairy motivation BS we constantly get jammed on this site of late.

We probably discussed 80% of this deal in the propertychat chat room.

pinkboy