Buying a commercial property

Dave5

Hi all

I'm looking to buy a shop with a mortgage, I was just wondering if it's better to buy it in my name or a ltd company? I'm putting down a deposit of 25k, the rest will be a commercial mortgage at 4.5%, I have very little experience in this field, what are the pros and cons? Just to clarify, I'm buying the shop so that I can run my own business in there.

Thanks

bris

Buy it in a ltd co to protect yourself when or if it goes belly up.


Shops are in serious decline so you are taking a risk.


If you need to get out it's far easier to walk away from a ltd co than have yourself being personally liable for rates etc for God knows how long as you desperately try to sell.

lewisa

I disagree with bris.

Keep the building and company entirely separate.

If the building is owned by the company and the company fails, then the building will go with it.

If the building is owned privately and the company fails, then you still have the building and can sell it.

Assuming the worst and the company fails, how long would it have to take to sell the building to make that a worse outcome than losing £25K capital you personally invested in the property.

SmashedAvacado

If you are planning to operate a business, then leasing a shop might be better for you. If you tie up your money in property, then this means that growing will be harder. Is the idea that you would trade from the shop or let the shop to someone else?

davidmcn

Bear in mind that the mortgage lender (and possibly others) will expect a personal guarantee from you even if you use a limited company - unless the company itself is sufficiently creditworthy (but I'm guessing that if it already were, you wouldn't be here asking the question).

AdrianC

lewisa wrote: »

I disagree with bris.

Keep the building and company entirely separate.

If the building is owned by the company and the company fails, then the building will go with it.

If the building is owned privately and the company fails, then you still have the building and can sell it.

Assuming the worst and the company fails, how long would it have to take to sell the building to make that a worse outcome than losing £25K capital you personally invested in the property.

I suspect you're misreading the OP.

I think he's looking to buy a property (which happens to be commercial) to let out.

He's then asking whether to buy it in his own name, or set up a limited company (which he'll own) to own the property.

Whoever ends up renting the shop will be somebody else, unrelated.

OP - can you clarify?

Dave5

AdrianC wrote: »

I suspect you're misreading the OP.

I think he's looking to buy a property (which happens to be commercial) to let out.

He's then asking whether to buy it in his own name, or set up a limited company (which he'll own) to own the property.

Whoever ends up renting the shop will be somebody else, unrelated.

OP - can you clarify?

I'm looking to run my own business in the shop.

cloo

I'd get professional advice on this, it is not to be gone about lightly and has a helluva lot of complications involved. Good luck!

Dave5

SmashedAvacado wrote: »

If you are planning to operate a business, then leasing a shop might be better for you. If you tie up your money in property, then this means that growing will be harder. Is the idea that you would trade from the shop or let the shop to someone else?

I'll be running my own small business from the shop.

AdrianC

OK... Is your retail business limited, or sole-trader? Do you have an accountant for the retail business? What do they say?

Think about an OpCo/PropCo separation at the very least, whereby you separate the property and the operational side.

Dave5

AdrianC wrote: »

OK... Is your retail business limited, or sole-trader? Do you have an accountant for the retail business? What do they say?

Think about an OpCo/PropCo separation at the very least, whereby you separate the property and the operational side.

The business doesn't actually exist yet, so I'm just trying to figure out which option is the best, so far it's seems to be the case that a ltd is probably most suitable. Could you please get into more details on OpCo/PropCo?