[blink]
I am interested in a commercial property and have submitted an offer although it has not yet been accepted. The return is good in a growth area BUT the lease has only one year left – it expires in December 2005. In checking with other agents in the area, they have advised that it would be fairly easy to re-lease if the owners were to vacate as it is in a good area and a good sized block. The rent per square meter is also below market value which is good. Still I can’t help feeling nervous because of the lease and I am worried that we will have trouble securing finance because of this. Is that likely to be the case?.I thought I would try to speak to the tennants directly to see if I can ascertain whether they intend to stay beyond the term of the lease. The agent has said they are not willing to commit further at this stage. What do you think? Am I right in worrying or should I snap up what seems to be a good deal otherwise!Amanda123
The question becomes can you carry the property for long enough untill you get a new tennant? If you can’t I would be extremly wary of it.
Rgds.
Lucifer_auWhat type of tenancy is it?
How many other vacant properties are there in the area?
What else can the building be used for?I suggest you speak with the tenant to see if they can stay on (assuming their business is a viable business of course). To get an extended lease you may have to offer a carrot but that’s all about negotiation.
If the vibes say they won’t stay you need to determine the demand for such a property so you will know you can rent it again straight away.
If you’re still unsure, then walk away.
Cheers
JeffThanks Lucifer and Ibuycashflow.I appreciate the advice. I did manage to speak to the current tennant he pretty much said he wouldn’t be renewing the lease. So forget it, its too much of a risk. I’m not confident enough that I will be able to re- lease it in 12months. I’ll have to keep hunting for something with a more solid lease.
I’m still learning, so really value the good advice that can be found on this forum.
Cheers
Amanda123
You must be logged in to reply to this topic. If you don't have an account, you can register here.
