LondonLuke Posted August 15, 2018 Report Share Posted August 15, 2018 Hi all Does anyone work in the commercial property world or have experience in it? We are looking at buying a retail unit, have done some research, and getting closer to point of offer. Just really want some pointers on if we have covered all bases and also how to go about making an offer - with regards to factors to use to get the price down a bit. We will be owner occupied but still feel we should be looking at possible yield figures in case we want to rent it out going forward, and other factors a BTL investor would factor in to reduce purchase price (rent free periods, bringing to standard, etc) Thanks Quote Link to comment Share on other sites More sharing options...
oowee Posted August 15, 2018 Report Share Posted August 15, 2018 Get an agent to work on your behalf. It's not like buying a house. Quote Link to comment Share on other sites More sharing options...
team tractor Posted August 15, 2018 Report Share Posted August 15, 2018 The deposits killed it for me. 35% deposits Quote Link to comment Share on other sites More sharing options...
LondonLuke Posted August 15, 2018 Author Report Share Posted August 15, 2018 19 minutes ago, oowee said: Get an agent to work on your behalf. It's not like buying a house. Given the selling agent works for their client, the vendor, I assume you mean a buying agent? What is that likely to cost? X% of purchase price? 17 minutes ago, team tractor said: The deposits killed it for me. 35% deposits We have agreed finance at 20% down but guess each case individual Quote Link to comment Share on other sites More sharing options...
team tractor Posted August 15, 2018 Report Share Posted August 15, 2018 37 minutes ago, LondonLuke said: Given the selling agent works for their client, the vendor, I assume you mean a buying agent? What is that likely to cost? X% of purchase price? We have agreed finance at 20% down but guess each case individual You’ve done well at that. I tried recently and everyone I spoke to said it’s 35% which totally killed it for me . I was gutted . Quote Link to comment Share on other sites More sharing options...
LondonLuke Posted August 15, 2018 Author Report Share Posted August 15, 2018 19 minutes ago, team tractor said: You’ve done well at that. I tried recently and everyone I spoke to said it’s 35% which totally killed it for me . I was gutted . Maybe it’s industry/unit dependent. Happy to send details of our broker. Quote Link to comment Share on other sites More sharing options...
team tractor Posted August 15, 2018 Report Share Posted August 15, 2018 2 minutes ago, LondonLuke said: Maybe it’s industry/unit dependent. Happy to send details of our broker. Gave up now but thank you Quote Link to comment Share on other sites More sharing options...
oowee Posted August 15, 2018 Report Share Posted August 15, 2018 Negotiable fee depending on purchase price. Fom selling a lot of land,not retail it is likely to save you the fee. They will do work on comparables and trends as well as look at the RV. Quote Link to comment Share on other sites More sharing options...
LondonLuke Posted August 15, 2018 Author Report Share Posted August 15, 2018 8 hours ago, oowee said: Negotiable fee depending on purchase price. Fom selling a lot of land,not retail it is likely to save you the fee. They will do work on comparables and trends as well as look at the RV. Thanks. Will have a google. Quote Link to comment Share on other sites More sharing options...
button Posted August 15, 2018 Report Share Posted August 15, 2018 Have you had a property appraisal done? That would be my starting point. If the lender has got one, get a copy that will give comparables, comment on investment value, what incentives you would be required to give to secure a Tennant and would also give basis of how they have come to value, it similar properties within the area Quote Link to comment Share on other sites More sharing options...
Munzy Posted August 16, 2018 Report Share Posted August 16, 2018 Have you confirmed the rateable value of the property and thus the business rates you will pay? This needs to be factored in to overall annual cost as does insurance, I found them eye watering when buying an old pub. Quote Link to comment Share on other sites More sharing options...
LondonLuke Posted August 16, 2018 Author Report Share Posted August 16, 2018 11 hours ago, button said: Have you had a property appraisal done? That would be my starting point. If the lender has got one, get a copy that will give comparables, comment on investment value, what incentives you would be required to give to secure a Tennant and would also give basis of how they have come to value, it similar properties within the area Not yet. We are trying to avoid any costs prior to the actual agreed offer - but it may be have to review this. Have a good friend who is a commercial surveyor but they are in Vegas for two weeks as of today. Not so helpful. 48 minutes ago, Munzy said: Have you confirmed the rateable value of the property and thus the business rates you will pay? This needs to be factored in to overall annual cost as does insurance, I found them eye watering when buying an old pub. They are £15,000 so a cost of £7,200 to us over a year. I understand there is small business relief but I am awaiting confirmation on what if any reduction would be received. Quote Link to comment Share on other sites More sharing options...
button Posted August 16, 2018 Report Share Posted August 16, 2018 1 hour ago, LondonLuke said: Not yet. We are trying to avoid any costs prior to the actual agreed offer - but it may be have to review this. Have a good friend who is a commercial surveyor but they are in Vegas for two weeks as of today. Not so helpful. They are £15,000 so a cost of £7,200 to us over a year. I understand there is small business relief but I am awaiting confirmation on what if any reduction would be received. I understand about saving costs etc but this could save a lot of money in the long run and if you are financing I would expect the lender to make it a condition of the lender especially if the said property is going to be used as security. Find out which valuers are on the lenders panel Quote Link to comment Share on other sites More sharing options...
LondonLuke Posted August 16, 2018 Author Report Share Posted August 16, 2018 7 hours ago, button said: I understand about saving costs etc but this could save a lot of money in the long run and if you are financing I would expect the lender to make it a condition of the lender especially if the said property is going to be used as security. Find out which valuers are on the lenders panel I agree and we will have to have a survey. At the moment I’m trying to collate as much free information in order to work out the best offer price for the unit before going down the route of a survey etc Quote Link to comment Share on other sites More sharing options...
Konnie Posted August 16, 2018 Report Share Posted August 16, 2018 If it's a purchase in your survey get a asbestos report done, as if any alterations inside are needed could cost a lot more if it is present. Quote Link to comment Share on other sites More sharing options...
John_R Posted August 16, 2018 Report Share Posted August 16, 2018 Have you found out if the property is subject to VAT? Most commercial property is, and what I found utterly appalling is that Stamp Duty is applied to the VAT inclusive sum, even if you are claiming the VAT back. A tax upon a tax, insidious to say the least. Quote Link to comment Share on other sites More sharing options...
LondonLuke Posted August 16, 2018 Author Report Share Posted August 16, 2018 59 minutes ago, Konnie said: If it's a purchase in your survey get a asbestos report done, as if any alterations inside are needed could cost a lot more if it is present. Good thinking. Will be sure to check. Is certainly of an age that it could be present. 17 minutes ago, John_R said: Have you found out if the property is subject to VAT? Most commercial property is, and what I found utterly appalling is that Stamp Duty is applied to the VAT inclusive sum, even if you are claiming the VAT back. A tax upon a tax, insidious to say the least. Fortunately it’s not - would make for a slight cash flow nightmare if it were. Though apparently banks will lend short term on this basis as they know the money is guaranteed back. Quote Link to comment Share on other sites More sharing options...
button Posted August 16, 2018 Report Share Posted August 16, 2018 3 hours ago, LondonLuke said: I agree and we will have to have a survey. At the moment I’m trying to collate as much free information in order to work out the best offer price for the unit before going down the route of a survey etc With all due respect without full facts I would not be making an offer, unless you put it in subject to valuation and before you ask I am not a surveyor, but that will give you everything you need in order to decide what to offer Quote Link to comment Share on other sites More sharing options...
LondonLuke Posted August 16, 2018 Author Report Share Posted August 16, 2018 12 minutes ago, button said: With all due respect without full facts I would not be making an offer, unless you put it in subject to valuation and before you ask I am not a surveyor, but that will give you everything you need in order to decide what to offer As with any mortgaged purchase a survey will sense check any offer - if you are wide of the mark then the bank will be quick to pull the plug. I agree a survey before would be sensible - I would just like to check the owner and us are on a somewhat similar page before incurring significant costs. Should the survey come back at £5k under our offer then the next phase of negotiation can be started if needed Quote Link to comment Share on other sites More sharing options...
Newbie to this Posted August 16, 2018 Report Share Posted August 16, 2018 1 hour ago, John_R said: tax upon a tax, insidious to say the least. Nothing new there, same happens with Fuel, fags, booze and probably others as well. Quote Link to comment Share on other sites More sharing options...
John_R Posted August 16, 2018 Report Share Posted August 16, 2018 (edited) True but on those the VAT is the final slice, makes quite a difference if you're claiming back. 20 minutes ago, Newbie to this said: Nothing new there, same happens with Fuel, fags, booze and probably others as well. Another thought occurs to me. Have you considered buying it in the pension fund and renting back to the parent company? No capital gains tax on disposal is a clear advantage though there are if course downsides too. Edited August 16, 2018 by John_R The system has merged replies so apply accordingly! Quote Link to comment Share on other sites More sharing options...
LondonLuke Posted August 16, 2018 Author Report Share Posted August 16, 2018 27 minutes ago, John_R said: Another thought occurs to me. Have you considered buying it in the pension fund and renting back to the parent company? No capital gains tax on disposal is a clear advantage though there are if course downsides too. Have looked at a SIPP but they will only lend 50% of what you will put in so doesn’t get us very far in London. Great for those with a large cash deposit but not good if relying on mortgage sizes sums from bank. Quote Link to comment Share on other sites More sharing options...
John_R Posted August 17, 2018 Report Share Posted August 17, 2018 Ah yes I forgot that point. I've done this twice now, but it was a while ago. Quote Link to comment Share on other sites More sharing options...
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