I have read Steve’s book and have been surfing real estate websites for atleast 2mths and cannot find commercial properties that pass the 11sec rule, have a gross yield of > 10.4% and a coc return > 20%. Im beginning to wonder if they exist..do they? If so then where? Am i doing it wrong? Will I have more success when I start pounding the footpaths?..pls help even if it’s to offer some words of encouragement..RNAT
welcome rnat
With commercial properties you have to have a lot more cash up front, so the COC may not be as good. Why not look at residential if you don’t have the big bucks to buy a really good commercial building? the learning curve is also a lot smaller – easier to get your feet wet so to speak.
To venture into commercial deals, i would suggest a lot more education is required than Steve’s book. Start talking to the commercial agents, tell them what you are after. Ask to see what they have got, and crunch numbers on all deals – big and small. It will give you a feel for what’s out there today. From everything I have read, it suggests that commercial will do well with CG in the next few years.
Cheers
MelHi Mel,
Thanks for your reply. You’re right I am just starting off with commercial property, however I have had some experience with residential and it wasn’t good. I owned 5 -ve geared residential properties in Sydney’s west and sold them all about a year ago.
The property manager I had was very lazy and the tenants really messed up my places. Also the wealth building plan wasn’t sound, with every property purchase my available cashflow shrunk. With a growing family this all became very difficult.
Commercial attracts me because the tenants are running a business on your premises and there is a reason for them to keep the premises clean, tidy and in good repair.
The upfront costs with commercial are high but as with everything you gotta have a plan right? I have 2 other investors with me and right now we’re ready to spend about 1.2M. We hope to extend this to about 10M within 3yrs.
As you say there should be significant CG over the next few years but as Steve recommends I am investing for +ve cashflow and CG is a secondary benefit.
Do you think I should relax the rules a little? If so what do you recommend? Have you had any luck acquiring commercial property recently?
Again thanks for your reply. This forum is great! It really helps for like minded individuals to share ideas…RNAT
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