Hi, I am nickelben.
come across freehold service station with solid tenant and long lease in place. Never bought this type of property before . Not sure it is a good investment or not. Anybody who have bought this type of property can shed some light on this .Thanks !as name
Service stations can make great investments.
As long as the tenant is on a long lease and it is a decent size service station. The oil companies have been rationalizing their busimesses and care losing down the smaller ones.
Also check who’s repsonsibility it is to do remediation work on the site if the tenant leaves. All petrol stations have some leakage into the surrounding soil from the underground tanks and this can costs a fortune to fix before council will allow you another use on the site (for future development)
Remember commercial leases are very different to residential ones, and the ruules for buying commercial property are also different
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
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FREE subscription http://www.metropole.com.auThanks Michael .
You have told me something which i never thought of . If the tenant leave, can i get another tenant to operate the service station ? Or it is very difficult to get another one ? Is the oil company or the owner doing the upgrading when necessary ? Anybody have any idea or experience can shed some light would be most welcome .
hoping for more information,
NickelbenOne of the largest risks with a site such as you are looking at is site contamination….doesn’t matter what it is (grease / oil / petrol / heavy metals etc etc) it will cost you big time as Lessor to rectify if indeed you are responsible. In the councils eyes, as you will be the Registered Proprietor on the title you are responsible.
Check the fine print in the Lease to ensure that the current Lessee is fully responsible to de-commissioning the tanks and surrounding Earth before relinquishing the land back to you when they leave.
Rectifying the contaminant will cost you big time before an Environmental Engineer from the council will sign off to say the site is clean.
Of course, if the contaminant happens to leach outside the site boundaries and starts affecting other Land Owners…look out, you may as well kiss you property investing days away, ‘cos you’ll be court so much you won’t have the time or money to look for a 1 br unit.
Other than that, happy days if you can find a clean, reliable long term well paying tenant. Good way to offset your rising private fuel bill…get an oil company to be your +CF tenant.
Good luck with your decision.
Great! Dazzling & Michael , so the biggest issue is the enviroment contamination ! I certainly will take care before i dive into it . The agent said he had a ” full Environmental Site Assessment ” report available. So that is no going to guarantee a future leak ? am I right ? better check through the lease agreement to see whether the tenant is responsible for such thing. Thank you everybody ! Any thing else to look out ???
Need more information if possible,
Nickelben
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