I have enough of all the maintenance that come with residential properties and hence looking for retail shops. But how does one know what is a shop worth as this information is very hard to get. I ordered a commercial sales report from homepriceguide and out of the couple of transactions in the past 4 years only a few were shops and the rest were land sales or something else. I know I can put a subject to valuation clause in the contract but the hard part is to know how much to offer. Do we simply take 20% off the asking price or base the offer on the % return ?
thanks in advance.You need to find out the going rent rate per square metre of space in order to make comparisons with your subject property.
Location is an important factor determining both rent rates and value. (eg backstreet strip shops have lower rents than high street shops or malls)
Retail rates are effected by the likes of pedestrian count, vehicle traffic (as with service stations) etc.
Different types of businesses have different requirements such as the size of the retail area, service entrances, off street parking and so on.
Often you can add value by changing the type of business occupying a property (retail to restaurant) and sometimes vice versa.
You should be able to get some indicative information from the local real estate agents, or even try quizzing a local registered valuer.
Chhers
Jeffthanks Jeff. The problem is I don’t have a particular area in mind and wherever (all over Oz) there is a shop for sale then I have to decide how much I offer and found it very hard to get any useful info or sales data for commercials.
Have you read a book by Martin Roth and Chris Lang titled “How Investing In Commercial Property Really Works”?
Another suggestion is to make contact with several commercial real estate agents and find out what they have listed. You will need to know the location, size of building, net rent, tenant, terms of lease etc. This way you’ll have some info to make comparisons. If a property appears to stack up then do some more homework on the tenant, and checkout the terms of the lease.
You could set yourself up a database and build from there. Add information gathered on buildings even if they are not for sale. Once you have a feel for the market you’ll know when you’ve come across a bargain.
Cheers
Jeff
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