Forum Replies Created
Barhar7, Have you considered a joint venture with a developer? If you have enough equity in the property and are willing and able to continue to service the debt a developer may JV with you. This could mean they put up the building cost and you split the profits. Not sure what area you're in or the details of the asset. We might be able to assist with this – you're welcome to PM me if you want to look into it further.
Scott No Mates wrote:secureserver1 wrote:Capitalise that at 7-8% and you can work out the extra value you've just created. ($10,000 pa in increased rent capitalised at 8% adds $125,000 to the property value).….provided that it can be capitalised in perpetuity not just for the short term of the lease. That is, if the improvement will diminish in value to zero over 3-5 years you cannot claim it to add value past the useable life.
Just to clarify, I'm referencing the increase in capital value at the time – on an 'as is' valuation using the capitalisation method the increased base rental would positively reflect in the property value if refinancing, or sales price if selling.
HI Sash, I have never seen a pattern emerge for a 'rule of thumb' percentage increase due to the many variables involved. I have however seen properties with no value whatsoever added to them when a DA has been obtained (wrong product for the wrong market at the wrong time – owner actually went backwards as getting a DA through is not cheap as you probably know). You will probably need to run the numbers on both your scenarios and take it from there. Sorry I can't be more helpful.
Hi Fredo,
Commercial property is definitely more tricky than residential! Yields are far superior to residential property but this does come with increased risks. Vacancies are one of the biggest but like most property if you buy well you can minimise these. A big plus for commercial that I don't think has been mentioned yet is that you have far greater rights as a commercial landlord than a residential landlord without the residential tenancy act coming into play.The other is that commercial property (providing it's not strata titled) can have more upside and value-add opportunity too. For instance, you could buy a warehouse and raise the roof to add ceiling height which would increase the end usability, add in a mezzanine level and depending on the floor space ratio could extend the building footprint which would increase the rent you could charge. With the right commercial property you can make minor changes and increase your yield by a couple of percent. Capitalise that at 7-8% and you can work out the extra value you've just created. ($10,000 pa in increased rent capitalised at 8% adds $125,000 to the property value).
Best way is to use a tool like http://www.realestateinvesta.com.au – you can search for indicators that would suggest growth or a property that is undervalued or has additional opportunity (it's a paid service but worth it in my opinion)
Hi Deb,
I haven't found anything else as good. RealEstateInvesta.com.au is not perfect and has a couple of bugs in it, but nothing else can search by the parameters as this site lets you – I use it to find properties that can be further developed, offer vendor finance and have prices reduced. http://www.realestateinvesta.com.au
Hi Keiko, if you are using your friends log-in details and they have a one user license then they will not be able to tell what properties you've been looking up. If you use the market appraisal tool then there are only so many per month that they will have included in their package. I'm not sure if any that go over the limited are itemised on their bill by property address or not. If you're just doing general searching you will be fine. Of course delete any reports you have saved before logging off.
Hi Hendrick,
Personally I start with http://www.realestateinvesta.com.au – they source all real estate listings from all the major real estate websites and allow you to search with multiple parameters such as reduced prices, mortgagee sales, sales that are well below the median price point for an area, yield, vendor finance offerings, properties with development potential and more. Makes it much simpler to find the better deals in the first instance. Hope that helps.
Pretty much. It was a larger deal where the owner was putting up some substantial equity. If things went wrong they would have been heavily out of pocket
marsmac, as a rule of thumb 3 level walk up unit blocks will typically cost between $1,400 and $2,200 per square metre to construct depending on the finish. So you can multiply this by the number of square metres you expect the units will have.
As you might know, the floor space ratio's (FSR) for some of the zoning's in Parramatta council have recently changed. One site I am working on has changed so we can now build three times as many units on the property, which obviously has effected the site value.
Another property I'm working on in the upper north shore is worth about $1 million more when we combine with the neighbour. This is because the LEP allows for a higher FSR once the site goes over a certain size.
A bird in the hand can be great but there may be other ways to get more out of you sale – if you are in no hurry to sell. Good luck
Henry, try this link also they have a property tracker/analyser also
Most commercial leases will state that you can sublease with Lessor consent, however the lessor cannot reasonably withhold such consent. Definitely something you need to make sure is covered in the lease agreement if you intend on doing it.
Nathopoly,
You're share of profits is in the range. I've seen as much as 50% of the profits handed over if the original owner is willing to risk the entire value of his/her land if things go wrong. Joint ventures like this can be great as you save on the interest and require less equity. For what it's worth, most of the time in my experience when parties don't know each other, reaching formal agreement on terms after each party has received their independent legal advice is difficult.
