Forum Replies Created
Often the farming community is serviced by fuel distributors. They receive bulk deliveries mainly of diesel and these distributors may travel some distance to service the community.
Steve you said the tanks were owned by the Caltex Distributor who no doubt supplies this site. That Catex Distributor no doubt, supplies the farming community as well.
On a main highway is good but the profitability would not be coming from 1000 people – it would have to come from passing traffic.
Jeff
Hi guys,
Its seems to me that property investment is at its worst point in 5 to 6years. I beleive that property price are way to high right now to start accumulating and to be holding property right now is a great risk.This is a broad generalisation, not every country, city, or suburb will move at the same rate or within the same timeframe. I still maintain there is a bargain in every market.
Regarding interest rates, comparing the 90 day bill rate and the 10 year bond rate will give you some indication of what will happen to interest rates in the long term. It is a good idea to have a mix of floating and fixed mortgage rates.
Cheers
JeffDon’t base all your opinions of the fuel industry on retail margins alone. Remember that most of the major oil companies are involved in exploration, wholesale and retail. Each area commands its own margin. With oil prices at a high most of these companies are prepared to suffer losses in the retail area because they’re creaming it on the value of their reserves. (Except maybe Shell who have been overstating their reserves)
Aside from this a petrol station needs to do a certain number of litres throughput to be viable. These days 2 million litres per annum is a small site but it does depend on what other profit centres are available at the site. eg workshop, diner, liquor etc etc.
Regarding the move into Supermarkets such as Coles. In most cases you find the discount being offered on fuel is only if you spend so much on your grocery bill. As I explained in an earlier post, the fuel is a commodity and is often used as a “loss leader” to attract customers in the door. Profits are made in other areas, they look at the $$$ profit per customer for all the goods purchased rather than $$$ profit per item purchased.
A site for $200k sounds extraordinarily small. Check out litreage, land size (for possible development), local population, roading and town planning – better still, ask the agent to.
Cheers
JeffSteve,
Of course I’m interested. Even just for the sake of viewing figures and making comparisons.Cheers
JeffHi Steve,
All my sites have been fine except one. The tanks were lifted by Mobil but I managed to keep the mechanic on as a tenant and still get a reasonable income from it. The failure of this site was largely due to future roading changes and Mobil could not determine if they would have enough time to get a return on their investment.
Generally service stations are good long term leases because of the substantial investment under the ground. You don’t spend a few hundred thousand dollars and expect to move in a couple of years.
Most people do not understand the fuel game so are hesitant about petrol stations. Also talk of the supermarkets selling fuel etc etc.
Check out the competition in the area and see if you can find out if there are any major developments on the cards. Local knowledge will help you here.
You can email me on [email protected]
Catch you later
JeffGetting into commercial property first is fine HotProperty. It is just that the normal course through property is with residential because people understand it more easily and the entry level tends to be a lot lower.
If you are more comfortable with the risk involved with commercial property then it is highly recommended
Cheers
JeffResidential is a fantastic stepping stone to commercial, but I wouldn’t go selling off all my houses to buy one big commercial property. Best you move into commercial carefully and learn to walk before you run.
If you had a hundred houses you comfort level would already be greater with regard to price. Look at buying a smaller commercial property, learn the ropes, then buy some more.
Cheers
JeffSteve,
I own a few petrol stations in NZ and have worked for Caltex Oil in Australia.The steel underground tanks can leak over a period of time but there lifespan is dependent on the water tables in the area.
These days the u/g tanks are fibreglass strapped to a concrete slab and with an indefinite lifespan.
In the good old days the oil companies were responsible for the tanks, and any environmental problems. It is usually “the polluter” who carries the burden and invariably the oil company. Times have changed though.
Tanks are monitored on a daily basis. Operators must do fuel reconciliations to ensure there is no loss. Any leaks would immediately be detected. If a leak is suspected they may do a pressure test and soil tests. The commercial viability of the site will determine whether or not the tanks will get replaced or not.
If you check out the lease it will probably mention who owns the tanks. Importantly you need to know the litreage of fuel the site is doing. This will give you an indication if the oil companies will support the site or not.
Fuel is a commodity and is often sold as a “loss leader”, that is they don’t expect to make a lot of money purely from the fuel sales, they attempt drag you in off the street and sell you a good old Aussie pie and a can of coke instead.
Hope this information is of some help. If you don’t have any luck give me a yell I might be able to sell you one of mine.
Cheers
JeffHi Matt,
What do you want to know about smelly Rotorua?
I have a good portion of commercial property in Rotorua and a couple of houses as well.I was dragged up in that neighbourhood so am only too willing to help. There are good areas and bad but you can still find a bargain in both.
Some Property Managers will not take on IP’s in Fordlands but you can still get some very good buys and still get some good tenants there as well. Interestingly, the suburb is adjacent to some more affluent suburbs.
I have a property in Glenholm which is a good area but I’m still going to court on Wednesday over it – sometimes you just can’t pick them.
PM me with some details if you want to know anything specific
Cheers
JeffThere are a stack of Mortgage Brokers in NZ, some even contribute to this forum (ie NZ Mortgage Broker). Mike Pero Mortgages has just listed on the NZ Stock Exchange and there are many others if you refer to the NZ Yellow Pages (www.telecom.co.nz)
I suggest you make contact with one of them. Try and select one that is in the general geographical area of where you are planning to buy.
Cheers
JeffSorry Miracle, I tend not speculate on property in this way, unlike the sharemarket. The most common clauses I have used in the past are: delayed settlement, subject to arranging tenancy or just a general due diligence clause.
If you are interested in getting options to buy properties and on-selling them before you have to settle you should get in touch with some of the property finding people or “bird doggers” on this forum.
Cheers
JeffI agree with your earlier post Kay, quantity is not always the best option.
When I first began in property I bought “as many” cheap houses as I could. Now I spend more time on each deal ensuring better quality, growth and potential. The deals are in a much higher bracket now and part of the equation before I buy is what I can do to “add value”.
The project on the table at the moment is refurbishing 40 rooms at a pub and changing the use from boarding house to tourist accommodation. By selling the lease I’ll recover most of the refurbishing costs and will achieve a much higher rent.
So one deal can possibly achieve as much or more than 30 deals in dollar terms
Cheers
JeffA “put” option gives the holder the right to sell at a specified price (strike price) with in a specified time frame (expiration date)
A “call” option gives the holder the right to buy at a specified price by a certain date.
You take out a put if you expect prices to drop and a call if you expect them to rise.
Derivatives provide good leverage and can limit your downside
Cheers
JeffWestan,
We don’t need a Happiness Institute in NZ – we’ve got sheep.
Jeff
I would be interested to know how you get on in Vanuatu.
It is a place I have considered but haven’t had time to research.
Jeff
If this makes you feel any better I have also had roof and guttering problems.
I contracted a roofer to repair the leak and he has told me the roof is shot and needs replacing (est $10-15k). Anyway, he repairs the roof to the best of his ability and stops further leaking until such a time as we can replace the roof.
Now the tenants are taking me to mediation and want compensation for the loss of use of one bedroom, doctor’s bills, etc etc and they want me to reduce the rent as well, even though the roof is not leaking.
Cheers
JeffSorry Misty1 for the delay in reply – I’ve been shopping!!
No, the pinball machines and pool table collected about $800 pcm for the first 6 months and then the income began to decline. The method is to have a number of sites and you just move the machines to new locations.
I moved over to the coast and the Diner changed hands so just took the machines back.
Cheers
JeffMisty1
A few years ago I bought 2 second hand pinball machines and a pool table for $3600 and placed them in a small suburban diner on a 60/40 split. For the first 6 months they collected an average of $800 pcm.
I now keep them in my games room, they’re great fun after a few ales
Cheers
JeffHi Dreamweaver,
Yes you can transfer the IP into the name of the Trust at a later date. It will cost you legal fees and probably something regarding the mortgage transfer etc.I probably wouldn’t bother with the one, just ensure you purchase future IP’s under the appropriate structure.
Cheers
JeffHi Jo,
Surely though, option A must have a value as a deal – what price would it be worth to you to opt for A instead of B.
Perhaps that price might be worth offering as you don’t know what the other guy is offering. You’d be kicking yourself if he put in a low offer and got the property.
I say make offers for both at the prices you are comfortable with, they can only say no.
Jeff
