Buying Property 101
In Show 059 – Buying Property 101 originally broadcast on Facebook Live on Wednesday 7 February 2018 we explore this interesting topic.
You can download the workbook here 059 – Workbook.
Your business is taking off and now you have to park those profits somewhere. That’s what Phase 9: Investing in property is all about. In this episode we discuss the different types of property you can invest in, what you need to think about before you sign and the due diligence process.
There are several steps you need to consider before you buy any piece of real estate.
- Find the property that you want to buy
- Conduct a visual inspection on the property
You would me amazed how many people purchase property with out ever having seen it. They simply take the word of their agent. A visual search will confirm that there are no obvious problems with the property but will also give you a sense of the neighbourhood. You should also conduct a pest inspection to make sure the property is vermin free.
- Get your negotiation strategy read
There are many different tactics you can after you’ve made your initial offer. Steve Jobs would have a red line worked out before the negotiations even started and worked back from that. Others just start with their best offer right out of the gate.
- Appoint a lawyer
You need to make sure you have someone on your side that knows what their talking about. A good lawyer will do all the right searches – from contaminated land to encroachments. A property transaction is a legal one and there are many government forms and duties that have to be dealt with correctly.
- Settle the transaction
This is by far the simplest (and most fun) part of the process. It basically involves a bunch of people meeting and exchanging cheques. All the hard word has been done by the time you reach this stage of the process.
- Completion and post-settlement
Your documents have to be registered with land titles or whomever handles the registry of land in your jurisdiction.
There are many different kinds of property that are available for purchase. Residential, industrial, general commercial, rural properties and retail shops. There are an increasing number of industrial properties being developed in large urban centres. Rural property is usually a more long term investment. You may have the hope that it will be rezoned or annexed in the near future but otherwise unless you’re planning on starting a cattle ranch this will be property you hold onto for a long time. A retail shop is a popular investment but you need to make sure all the zoning and other regulatory requirements are in order.
As we’ve discussed in previous episodes you can structure your business in a number of ways. The primary question is why are you buying this property? The answer to that question will dictate what entity you use. If you’re buying your primary residence you will likely do that under your individual name because of all the tax benefits you will accrue. If you’re buying an investment property, though, you might want to use a trust if it’s a positively geared property. There are many ways to do this but you have to get the right advice from your team.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.