Do this one thing before you invest in a commercial SMSF property
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So, you’ve decided to expand your SMSF investment strategy, and started looking at buying a commercial property.
Should you get an independent valuation before you buy?
Of course you should, and here’s why.
Firstly, smart thinking on the commercial property front.
ATO figures show that commercial property investment within an SMSF grew nearly 47 per cent in the five years to March 2017. And while 4% of funds have residential property assets, commercial property in an SMSF is nearly three times as popular, at 11%.
This is because of the secure, and largely higher, income yields commercial property offers, due to possibly longer leases and the high demand certain commercial properties and locations offer.
Secondly, as with all significant financial decisions, not to mention major life decisions about how to best prepare for your retirement, forewarned is forearmed.From a property investment standpoint, that means getting upfront valuation advice on a potential property, before you make the big leap.
How do you ascertain the value of your new investment? Your best bet is to get an expert involved, and get a pre-purchase valuation from a professional, independent valuer.
A pre-purchase valuation provides an estimate of the value of a property, taking all local market factors into consideration. This includes market conditions, demand and supply of similar properties, economic conditions, potential yield, and other factors which may have an impact on marketability and value of the property.
Specific to commercial valuations, a valuer will also consider things like foot traffic for retail properties, zoning, existing tenancies and transferable business assets.
Property valuation experts can empower you to make informed and strategic decisions about your investment in commercial property. They can also arm you with the information you need to negotiate borrowing terms with your lender.
And once you’ve decided whether to invest or not, a regular valuation from an Opteon valuer can help in multiple other ways - with ongoing rental reviews, lease consultancy, capital gains tax and tax depreciation schedules.
A regular valuation will also help you meet those all-important SMSF reporting requirements. As the proud owner of your new SMSF commercial property, you’ll need to prepare annual financial accounts and statements, and these accounts must include the market value of any property.
A professional, independent valuation provides objective data that can be used by the SMSF auditor to sign off on the financial statements.
In addition to the recommended independent valuation of any property assets in an SMSF every three years,you might need a valuation if there’s been material shifts in property market conditions in your area, or if the SMSF property asset makes up a large proportion of your fund.
In most instances, for the two years in between, Opteon can conduct an AMA (Analysed Market Assessment) to determine the property’s value and provide a written report.
Whether it’s pre or post commercial property purchase, getting an independent commercial property valuation or tailored property advice that fits your commercial needs, is easy with Opteon.
Please contact us if you would like more information on how we can help you with a property valuation for your SMSF. For a free quote please email contactus@opteonsolutions.com or call 1300 40 50 60. We can’t wait to help you!
This article first appeared on Smart Property Investment: Do this one thing before you invest in a commercial SMSF property
