There are plenty of advantages in owning your own office
No rent and no landlord are two that readily spring to mind.
Mark Draper,private client adviser with financial advisers GEM Capital, decided to invest in his own premises.
"We were previously renting and happy to do so. We were in the premises for about eight years. But the landlord was always a difficult person to deal with - the typical scenario where they spend nothing on the building but want top dollar for rent," he says.
For instance, Draper found out the landlord had wired one of the lighting circuits not with proper electrical wire, but speaker wire.
"We wondered why the circuit would blow regularly. We had similar problems in an A-grade office in Adelaide. You would put the kettle on and it would take the power out. Landlords typically do things on the cheap."
Lack of investment by landlords was just one reason Draper wanted his own real estate.
The other was that the landlord tried to jack up the rent by 30 to 40 per cent. "I found this quite stressful. We had always paid the rent on time and didn't cause the landlord grief, and yet we were being screwed.
"We then did the sums and determined that for a slightly higher outlay each month, which was manageable, we could end up owning the building rather than paying off someone else's mortgage."
More importantly, buying property gave the business certainty about where it would operate from.
Draper says it also gives the enterprise control over things such as the electricity supply and airconditioning system. "These were failings in the previous two buildings," he says.
The financial advice firm bought the worst place on a good road, 154 Goodwood Road, Goodwood, near central Adelaide.
"We knocked down what was there and built from scratch. Our building is made for us," Draper said.
"But we also considered making it attractive to lease out at a later stage when we are finished with it."
He made sure parking for clients and staff is good. "This is critical for business in my view but often overlooked."
Although it made financial sense to own the premises, Draper says the main driver for the purchase was to ensure the business had certainty over where it operated. "To make sure that we didn't overcapitalise I spoke with commercial property agents to determine the market level of rent payable in the area."
He says before deciding to buy a business property, it's important to know the market rents and, in Gem Capital's case, the construction costs to work out whether it's a good deal commercially.
Frequently Asked Questions about this Article…
Owning your business premises removes rent and landlord issues, gives you control over building services (like electricity and air conditioning), and provides certainty about where your business will operate — all benefits highlighted by Mark Draper of GEM Capital.
Draper experienced poor landlord maintenance, electrical problems caused by cheap wiring, and a proposed 30–40% rent hike. After running the numbers he found that for a slightly higher but manageable monthly outlay they could end up owning the building rather than effectively paying someone else’s mortgage.
Owning the premises locks in your operating location so you’re not subject to sudden rent increases or having to relocate. It also lets you design the space and control critical systems (power, air conditioning) to suit your business needs.
Consider features that matter to clients and staff, such as adequate parking, reliable electricity and air conditioning, and a layout built for your operations. Draper emphasised parking and having a building purpose-built for the business.
Yes — in Draper’s case the business calculated that a slightly higher monthly outlay was manageable and would result in ownership rather than paying off someone else’s mortgage. But the article stresses doing the sums first to ensure it makes commercial sense.
Talk to commercial property agents to determine local market rents and estimate construction or fit-out costs so you avoid overcapitalising. Draper used market rent levels and construction costs to assess whether the purchase was a good commercial deal.
Yes. Draper said they built their Goodwood Road premises for their own use but also considered making it attractive for leasing at a later stage once they were finished with it.
Owning the property avoids issues like landlords cutting corners on maintenance (for example, improper wiring that caused circuit failures), unexpected large rent increases, and the stress of dealing with a difficult landlord.
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