Specialty Flavours was occupying a 320sqm building in Keppler Courrt, Seaford and needed around 40% extra space for their growing business.
The family realised that rather than continue to pay rent, they should look at buying a premises. After all there is little difference between rent and interest, the benefit in buying is that over the longer term, capital appreciation can provide great upside for retirement.
There are also significant Depreciation Benefits that add to the financial positives for owing. Specialty Flavours set up a SMSF and contributed 35% equity with the bank funding the rest.
The new property, Unit 3 / 4 Interchange Way, Carrum Downs (building 454sqm) was purchased for $540,000. The business will pay rental of $34,000 p.a which will service the borrowings and is equivalent to paying rent for larger space.
"Specialty Flavours will have full control over tailoring their own building to suit their needs as they choose."
Over the coming years not only will they continue to grow their business, but at the same time will go a long way to paying off the debt on this investment property. The benefit is two - fold and will prove to be a much deserved nest egg for the business owners upon retirement.