Ok, I’m trying to source properties for myself. I came across a commercial property being sold for 250K. It has a new 3 x 3 lease (with tenant of course). The yearly return is 18K, weekly of $375 and monthly or $1500.
Does the 11 second rule apply if the same way for Commercial as it does for Residential.
Also, does the ammount of deposit (hence the size of the loan) make a difference to the 11 second rule?
Sorry if the questions are too basic, I’m still getting the hang of this.
Thanks in Advance.
Elvis Sinosic
http://www.ElvisSinosic.com
http://www.SinosicPerosh.com.auElvis, my suggestion is that that property isn’t any good.
The return doesn’t look good enough, you haven’t mentioned any potential to improve the return, haven’t mentioned whether the location is very good, and having to rely on just the one property is risky.
If you must buy just the one commercial property look for something that you can use for your business. Otherwise stay out unless you have more money to play around with.
What to look for ? A commercial property which you can improve upon, in a prime location.
Country town is quite O.K. as long as the population is say 25,000 +
Pisces
Thanx for the info. The property is located in the Central Coast area. I have no interest in running a business there. I just thought with a current tenant and a new 3 year lease it could be a good option as an investment. I also figured as my first property it also wouldn’t affect my home owners grant/stamp duty when I did buy a house.
Once again thanks.
Elvis Sinosic
http://www.ElvisSinosic.com
http://www.SinosicPerosh.com.auElvis,
Commercial properties have some great benefits, especially if you can get long term leases. The returns are generally higher as the tenants pay all outgoings, but you may need as much as 30%deposit to secure the property.
David Femia
http://www.femiapropertygroup.com.au>>Commercial properties have some great benefits, especially if you can get long term leases.<<
David, you are talking as if you’ve got something to sell.
What about the downside ?
All, please be aware that one’s security doesn’t lie in a lease as the tenant can go broke. Or if they don’t and they walk away from the premises at the end of the lease because it is a shit location you are the loser, the sucker.
The only security lies in the location. The knowledge that if the place was empty you CAN get a replacement tenant.
I like retail shops because the tenant will stay in place a long time, they will pay the rent on time as they have a business to protect, and generally. when the time comes they want out they usually provide a replacement tenant whom they sell their business to.
As I said before, commercial is fine provided the location is O.K. and provided you have more than one such property so as to spread the risks
(And, should I add, as long as your loan isn’t that big that you have to rely solely on the rent to pay the interest – but that is me. By all means play Russian Roullete. It is a free world after all.)
Pisces
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