Going commercial
Deciding to buy commercial property—either for your own practice or as an investment—can make good business sense in both the short and long term.
Learn MoreOwning your practice premises offers many benefits that simply aren’t available when leasing.
Owning the premises of your practice is a common goal of many medical, dental and veterinary professionals. The benefits of ownership include possessing an asset that can increase in value, having complete control over the design and fit-out of your practice, and the ability to place your business in a better tax position.
The right time to strike out on your own, establish a practice and purchase the premises is largely dependent on where you are in your career life cycle.
“It’s always a good idea to get some first-hand experience under your belt, then look at purchasing your practice premises,” says Michelle O’Hanlon, BOQ Specialist Commercial Partnerships Manager, who has more than 13 years’ experience in healthcare finance.
“Through their degree and training, younger medical professionals are well-versed in the clinical side of their profession, but they may not have the financial knowledge required to make this next career move.
At BOQ Specialist, our extensive experience means we are able to help guide our clients through this unfamiliar process so as a buyer, they feel comfortable with their position.”
Pros and cons
No matter what your profession is, you need a good general understanding of the pros and cons of practice ownership before making any decisions. BOQ Specialist has a set of informative publications called Guides to Purchasing Your Practice that are designed to help you navigate the process of owning your own practice, and help you to weigh up the option of either buying or renting your premises
“The guides are very thorough,” says Michelle. “The general information we offer is an important part of forward planning before making any kind of commitment.”
Deciding to rent your premises instead of purchasing can be a perfectly sensible option for some professionals. You can lock in a long-term lease so you have the security that you can stay in that space. The downside is that you don’t own an appreciating asset and you are paying rent that generally increases every 12 months. Owning your premises is a long-term investment that provides a financial safety net. It also allows you complete freedom in designing and fitting out your practice. After all, this is where you are going to spend the majority of your working life so why not make it your dream practice.
“One of the big issues, often overlooked by younger professionals starting out in practice ownership, is retirement,” says Michelle. “Selling or renting the premises you purchased years or decades previously can help fund your retirement lifestyle. Utilising a self-managed super fund (SMSF) to buy your premises can also offer attractive tax benefits.”
Ensuring that the space itself is right for your needs is essential. It has to be big enough to allow growth but not so big that it can’t be filled. It’s also important to do some research on the local region. Is it a growth area? Is there competition? Is the family demographic growing?
Count the costs
Whether you’re purchasing an empty building or converting an existing practice, there’s going to be additional costs involved. Part of the joy of owning your premises is the ability to stamp it with your personality and business ethos. Refurbishing an existing practice can range from a new coat of paint to a full redesign. Starting a practice from scratch requires a fit-out, new equipment and effective marketing. All of these costs are manageable, provided you have a realistic expectation of the final total. It’s important that over-capitalisation is avoided.
“We work with our clients so they have an idea of what their cashflow will look like,” says Michelle. “If a fit-out and equipment are required, then we can provide options to enable that large investment.
“For doctors, dentists and vets, being technologically up-to-date is key—and that means investing in the appropriate equipment and processes. It is self-defeating to fit old technology into a new practice. While the latest digital technology is expensive upfront, the longer-term investment and efficiencies it provides makes good financial sense.”
Handy workshops
It can be quite overwhelming when considering whether to purchase the premises for your practice. However, with good financial advice and guidance, the benefits over renting make it a very attractive proposition. Not only do you own an appreciating asset but also the equity in that property. This equity can be used as a guarantee for whenever you need to establish a loan.
It’s essential to collect as much information as possible before making any financial commitment. Even if you’re just idly wondering if you’re brave enough to start the process, accurate and timely facts can help you to make an informed choice. Fortunately, BOQ Specialist runs a series of workshops that offer valuable general information.
“We host workshops that cover purchasing your practice premises, setting up your practice, and the variety of finance options that are available,” says Michelle. “Alongside our industry partners, we can help explain all that’s involved in order for you to make the best decision. We want to make sure that our clients are informed, they've done their due diligence and we can work together to make their practice a success. Choosing to purchase your practice premises can be a huge step in the right direction.”
You can find out more about our commercial property loans and limited time offer by contacting your local finance specialist on 1300 160 160 or visiting boqspecialist.com.au/commercial.
