Forum Replies Created
- doogs1357 wrote:No problems.
If you've got a tenant in place my advice would be:
– Maintain communication regularly and make sure the air-conditioning is working properly. You'd be surprised, but this is the biggest complaint we get from sitting tenants. A tenant isn't going to move just because the air-con doesn't work well. But it will make their day to day life less comfortable, so when an the lease is coming up and an opportunity comes up to check out other properties on the market they'll jump at it.
– Don't be soft in rental negotiations. Research the market before you approach your tenant to renew, most agents will give you honest advice on what to expect. I would start talking to them 12 months from lease expiry, and if I didn't have a commitment for them to renew 6 months from lease expiry I'd start marketing for another tenant. This will often push them to get their act together. If you're nice and let them float on a month to month you will lose out.
– Just because you're a nice landlord doesn't mean they won't bullshit you and move out. Commercial is all about the numbers, if the location isn't quite right or they have outgrown the space they'll move. If you can get onto them early before they've had a chance to think about it in detail you can sometimes get a commitment to renew the lease without any troubles. So start talking to them early.
Hope this helps.
Cheers,
Doogs.
ok cool thanks for the advice well see how everything goes. ill post an update on everything once were all settled in
thanks again.
doogs1357 wrote:Hi Guys,I'm a commercial property sales and leasing agent in Sydney. I've been doing it for around 8 years and I'd like to share some insights for those that are interested:
– Investors with property valued between $300k and $3mil rarely do well with industrial or commecial (office) investments in my markets.
– Property can easily stay vacant for 6-12 months while looking for a tenant. A quick search of my listings shows that I've got over 120 properties that have been vacant for over 9 months. I've got a couple of small strata units owned by individual investors that have been vacant for over 2 years! This is even after we have reduced the price by 50%!
– Tenants expect incentives by the way of rent free, or cash contributions to their office fit-out to lure them to a property. This is generally a MINIMUM of 1 month per year, but can go as high as 4 or 5 months. So on a standard 3 year lease you can expect to offer between 3 months and 12 months rent free.
– Tenanted investments are often offered at above-market rentals. The owner will put a tenant in place for 3 years, offer them 1 year rent free at a higher figure then package the investment as showing an 8%+ yield without revealing the rent free period. When the property settles the owner will top up the tenant for the outstanding rent free payable. Remember, the document detailing the incentive is not attached to the lease.
– While a "typical" commecial lease passes on the cost of the outgoings to the tenant this is becoming less common due to the state of the market. Around half of my transactions now involve a "gross" lease whereby the tenant pays the rental and the owner pays the outgoings.
There is money to be made in commercial, but the real opportunities are over $3mil where you are attracting larger, higher quality tenants and you are not competing with as many investors to secure the opportunities.
Any questions please let me know, I'm happy to help out.
hi doogs thanks for the advice.
just an update on my situation. I can say i was extremely lucky as soon as we singed the paper work for the property we had someone ready to sign a lease we did have to discount it by 10% but we should recoup that on the next years increase.
I think if I maintain a good relationship with the tenant we should be able to keep them there for some time, without having to give away too much from my side.
As for the commercial above 3mil I’m quiet sometime away from affording that. My plan is to have a mix of commercial supported by residential. So far I have 1 commercial and 1 residential supporting that plus my wages.
thanks for the words of insight, Feel free to offer me ur idea's as i say im new to this.
thanks again…kum yin lau wrote:Hi, my experience with lenders is such that I can probably write a book about how the banks decided that I didn't have the means to repay.I take whatever loans I can get. Sounds like a broken record. When RESI said I qualified for a 500000 loan in 2000, I asked when do I get it, where do I sign? Remember back then, that was a huge loan.
The loan is less impt than our own knowledge of our ability to manage. I'm now on a 9.5% balloon loan [12 months] I took it cos I was supremely confident I could repay & I could make a return to justify the interest.
When I bought the commercial properties, I used the equity in the houses. The shops were never collaterised. The lender increased the LVR to 75% to give me more borrowing but they were so slow I used my cash savings. I was on high income then.
Back then, I didn't know that there was such a thing called a strategy for property investment. It just seemed the logical thing to do. And the cashflow from the shops was so strong that it was a stressfree thing.
I've skipped blithely from collaterising resi property to buy commercial & when the cashflow was established, I collaterised the shops to buy resi properties to subdivide & used them to get a business loan for the building.
So the most impt question is : is the commercial property worth buying? Then just take the best loan that you can get. Then work on getting to just above cf+ [usually through repayment]
Then sit back & relax until the next step.
Good luck,
KY
Sounds like a good deal with this property looking forward to buying more! thanks for the words of wisdom. See what happens when the paperwork for the bank is coomplete.
Do you know any good accountants/financial advisors in sydney?Hi can anyone recommend a good financial adviser and accountantin the Sydney area? i don't wanna spend a huge amount but I'm willing to compromise.
thanks…
crj wrote:Another aspect to consider is some lenders want principal and interest repaid over say 10 years. This can have a detrimental impact on your cashflowI'm filling out paperwork for the loan as we speak. repayments will be more then rental return, but i have another pos cash flow property to cover the difference. you know any lenders that are competitve. im applying with anz at the moment.
thanks mate
kum yin lau wrote:Hi, tell me when you find a commercial property with good leases selling @ 9% net yield. I'll pay you finders' fee.KY
Hi KY, how are you i just wanna advice of something i have found, your opinion would be appreciated. commercial property in Sydney city area asking price of about $300, 000 and rental lease dues to end this year, currently being rented at $600/week. the property was valued for more then asking price!? what you think?
