Buying Commercial property from plans!!

[hikicker]

I've got a very good deal on an industrial unit in Dublin on a Greenfield site. I'm quite nervous about handing over 10% with signature of contracts as I wont see anything tangeable for at least a year. Is it madness in this economic climate to
a) buy a commercial property and
b) hand over the guts of €20k to a developer?

(I'm buying it personally and renting it to my company which in a good position at the moment so I'll have no problems geting rent for the duration of the mortgage.)

I'd appreciate any advice on this, thanks.

 

[mercman]

hand over the guts of €20k to a developer?

Why don't you offer a smaller percentage (5%) whilst exchanging contracts. Alternatively, give the full amount to your solicitor and ask your solicitor to hold the money and ask him to give a legal undertaking to the other side. Then if the developer goes but your money is safe.

 

[Commercial]

I would agree with Mercman, however the bank may dictate that the deposit is 10% and is given directly to the developer. If your business is going well and you don't think that you will need to sell the new commercial unit in the near to medium future then you should be fine. You should check out as much about the developer as possible to make sure that they will not go bust before the building is complete. or else your money could be held up for a long time.
Great to hear that your business is going well and best of luck in the new property

 

[jack2009]

I think you should read the posts regarding Laragan to get an idea of some of the pit falls.

Personally, I dont see why you would want to buy off the plans except that you say it is a good deal. However, have you done any guess work as to how good a deal the price is compared to what the prices may be when the units are completed and the possible rental income will be at that stage.

 

[hikicker]

I think you should read the posts regarding Laragan to get an idea of some of the pit falls.

Personally, I dont see why you would want to buy off the plans except that you say it is a good deal. However, have you done any guess work as to how good a deal the price is compared to what the prices may be when the units are completed and the possible rental income will be at that stage.

The laragan situation is what makes me reluctant to hand over anything. The reason I'm buying from plans is because I'll have reduced stamp duty and the price seems very good value (€160k for 1000sq ft inc. basic fitout in west Dublin). The Bank are lending 80% so I've to pay the rest (€16k now with contract, €16k on completion) however I'd rather pay €8k (or less) now and the €24k balance on completion (approx 1 year), does this seem unreasonable?? I doubt there are many prospective buyers banging down the developers door so i feel I'm in a better situation to dictate terms....

 

[Complainer]

TI doubt there are many prospective buyers banging down the developers door so i feel I'm in a better situation to dictate terms....

The same would apply to many existing commercial properties, which are having very serious trouble finding tenants. Have you seriously looked into buying an existing unit, instead of off-plan?

 

[hikicker]

Thanks for the advice lads however I need to pick your brains again. As i said before, the company is doing very well and has excellent cash reserves. Are there any advantages if my company purchases the company? I'm aware I'd be liable to double taxation if the company ever sold the property but it means I wouldn't have to stump up any of my personal savings to buy it personally. Anyone know the pros and cons of both options??

 

[Brendan Burgess]

To deal with your first question about the security of your deposit. Could you structure the deal in such a way that your deposit buys the site, so that if the company goes to the wall before it is completed, at least you own the site and can get finish the job yourself.

The second question is dealt with at length in this Key Post, so no need to reinvent the wheel here.