Tag Archives: businesses
To Buy or To Rent Sydney Office Space? Five considerations to help you decide
Despite the economic downturn, the Sydney commercial property sector is still looking healthy. As Australia looks poised to come out of the financial slump strong, businesses are taking advantage of current depressed property and rental prices and looking towards the future.
The option of buying or leasing commercial property is certainly something that many small businesses will consider. The decision is something that will come to greatly affect the business in the long run and there are many questions to ask. The individual needs of your business will ultimately determine the best option for you, but here are a number of things that every small business should think about:
Upfront Costs: For some businesses, the most limiting factor to buying office space is the large upfront costs. Down payment on typical Sydney real estate is usually about 25%-30% of the total cost, in addition to fees, inspections and other expenditure. However, if you’re in a position where you can afford to, purchasing a commercial property can pay off in the long run and greatly reduce your future overheads.
Variability: Obviously, one of the most attractive incentives for buying is knowing more accurately the costs you will incur for a certain amount of time. Leasing leaves many businesses vulnerable to the whims of the property sector with some leases pegging rental prices to the Consumer Price Index. However, many areas, such as Grade A office spaces in Sydney CBD, experience much less market fluctuation. Consider the variability of the area and grade of the property you’re looking at.
Appreciation: If you decide to purchase commercial space, you’re adding a valuable asset to your business with the potential for appreciation. Of course, this means you’ll need to do some heavy research to find a property that has good potential and will suit your business’s needs.
Depreciation: With appreciation, comes depreciation and tax considerations. Costs incurred from repairs and renovations to tenanted property are handled differently than private property. Lease holders can claim improvements immediately while owners may be required to depreciate their expenses over time.
Potential Growth: Finding a space that suits your business is very exciting, but what about the future? For many newer businesses, leasing could be the preferred option as it allows them to expand their more readily and with fewer limitations. Keep in mind that if you do outgrow your space, you can always lease the premises to help with the cashflow. Or you can consider initially purchasing a larger space and leasing part of the premises to another business to help cover some of the overheads.
These are just some of the many considerations that will help you decide if buying or renting is right for your business. An attorney or financial consultant will also be able to provide more information that is more specific to your business needs.
SBA Loans & Finance Consultants (Page 1 of 2)
The United States Small Business Administration (SBA) is the government agency designed to assist entrepreneurs in America with the funding of their small businesses. The SBA includes an assortment of tools and programs for every phase of business from a start-up advice, legal advice for more complex business transaction, and of course the government guarantee loan program they are so well known for.
SBA Loan guarantee programs help small businesses obtain financing by lowering the risk to the lender. With these programs, the SBA sets the guidelines for the loans while the Lenders make the loans to the small businesses. SBA backs those loans with a guarantee that will eliminate some of the risk to the lenders.
Most people have heard of SBA loans, so this is no secret to reveal. However, many Finance Consultants who are pursuing commercial loans often overlook these transactions as potential targets for their marketing.
The Project Corporation is a commercial finance consulting firm with more than 20 years experience. We have worked with hundreds of other Consultants through the years, and one thing we see is that many Consultants chase deals that are associated with daydreamers, people that are financially broke, and businesses that are in desperate situations. It is very seldom these daydream, desperate type of deals will ever close. The Consultant will never earn a commission. On top of that, these bad deals absorb the valuable time of the Consultant. Time is a constraint for all of us. We all need to place a value on our time and understand that there are deals that we need to let go. Otherwise we will end up like the desperate people that are calling seeking daydream funding.
There are literally thousands of good deals that each Finance Consultant can pursue. By picking an industry that you have a background in, or an interest in (based on reasoning), you will have a market of thousands of prospects to contact. An example is hotels. There are thousands of potential hotel financing deals in the U.S. How many hotels are in your area, or your state? Most hotel chains require a location to meet certain criteria for their facilities. These hotels need to remodel, or update their facility over certain intervals. Others are building new locations, or simply need to refinance their current location. These are real deals, and not daydreamers looking for quick millions on a deal that will never get funded.
How many other industries are like hotels where there are thousands of deals? How many industries are you familiar with? If you break down those industries into different segments, how many prospects are there? How many would fit within an SBA loan program? When you focus on real deals and stay away from the daydreamers, you will have success.
Despite the industry you choose you need to develop a quick qualifying process. Remember your time has value, but time is a constraint, so you want to use your time wisely. A quick qualifying process does not mean that you will instantly be ready to announce funding terms. It means that you will have a comfort level with the prospect, that they have a real deal that you want to pursue, and the prospect is serious about obtaining funding. If they are not serious, or dont supply the information you need for getting to your comfort level, then let them go. Remember there are thousands of good deals out there. Dont get hung up with time wasting non-potential deals.