Hi Threre All,
I recently did a mailed out to some Agents in rural Vic looking for some commercial property.
To my surprise they got back to me many properties, but 2 that stood out from the rest both with 12.5% returns but unfortunatly for me both priced over $1Mil. At that price its a bit of a stretch for us.Would others agree that with the bigger purchase priced property generally the returns are better.??
Why would this be the case??
John [biggrin][biggrin][biggrin]
hi JLtarra
First off check the post code with a bank and see will they lend in that town or area.
That return is not uncommon and the 1mil is not high for commercial as the norm is above 500k for a shop.
banks normally won’t lend above 60% on comm but it depends on the lender.here to help
We do have lenders that will go to 70% on a low rate and you can get LVR even higher if you are willing to pay a little more.
A lot depends on the property, the lease and the location,
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
grossrealisation,
I was more surprised at the return of 12.5%. I realise that price of commercial property is higher as we own some, but i don’t think of seen some thing with a return above 10%, maybe this is good sign for buyers?
JOhnSimilar with RIPs you will often trade off CG for yield as you move away from the capital cities.
Yields are usually higher as are the risks. Tenants can be harder to find and vacancies longer.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Whatsa RIP ??? [biggrin]
Originally posted by Dazzling:Whatsa RIP ??? [biggrin]
It is your bloody acronym for resi IP!
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
hi simon
A guy got into court here for swearing and you must learn to bite your lip with new investors and don’t be so hard on dazzling.
As for return there are lots of areas with high return but as I posted it depend of the risk and can you get a lend.
there are a couplke of towns in nsw that are in the 12 to 13% but you can’t get a lend and it even difficult to use the equity as a leverage.
as with everything if it look so good there is a reason why it isn’t snapped up or why they all look so good in the one town.
this is not to say its not a good investment some of them are they just don’t usually have good cg.
and in advance for dazzling that capital growthhere to help
Depending on where and what you’re looking at, I believe it’s easy to find cashflow positive deals that won’t break the bank. I’ve just been looking at 2 properties. One is a shop rented to a nationally branded chemist for $30 000pa, for sale at $350k neg. The postcode of it’s location has a population of 80 000.
Alos in the CBD of the same town is a retail shop with an office on top of it, returning $34 000 per year, for sale at $295 000. And the landlord is wearing the annual outgoings of $4000 per year-plenty of room for improvement.
Although I dont have commercial property (yet!) and know nothing about it compared to others I am definately finding deals that are cashflow positive that aren’t out in the boondocks and with fairly good looking leases aswell.
They are out there, so if you’re interested enough keep scowering your local papers and also http://www.realcommercial.com.au for deals. The site’s a bit sluggish but it’s where I found the deals mentioned above.
Good Luck…G7
Would others agree that with the bigger purchase priced property generally the returns are better.??Why would this be the case??
Yes, John, I would agree that the bigger the deal, usually the better the return. This sometimes balanced out with aspects like having tenants like the Fed. Govt. The lease usually doesn’t read that well – a standard Solicitor General’s lease – and the yield isn’t too flash, but…then the rent usually gets paid.
I think the deals get better, the bigger they are, as you are dealing with principals of businesses where locating the right premises is crucial to their business objectives, as these are usually running at a nice profit margin, say > 15%, they don’t mind at all paying a substantial sum to have a dominant presence in some high class prop. The trick is being able to pick this type of CIP or IIP up at a decent price.
It’s also pleasant dealing with individuals who have money, are very used to dealing and reading and committing to contracts. When they say something, they commit to it in writing and then follow through with the action…rather than dealing with people who have never read a contract and don’t associate signing a contract with actually having to follow through with what is in the contract, or dealing you up with 7 domestic excuses as to why they failed you with their previous undertaking. Sorry…scratchy record I know.
Just as a casual observation, why is everyone on this forum suddenly looking at commercial properties ?? I’ve been told by very intelligent people they are extremely risky and capital growth returns are very poor indeed. Personally, I wouldn’t have a bar of them myself…each to his own though. [biggrin]
Good luck to you all in whatever endeavours you choose.
Oh, and Simon, I agree with GR, don’t be so harsh with me…you’ll hurt my delicate feelings.
Are these type of properties of interest to investors? They are both in postcodes of over 50,000, and they are both Self storage complexes, both have provided 3yrs of finacials and are 12.5% average over the 3yr return.
They are of interest to me, but they are a little out of my price range.
the other question is, what is a good way to advertise these propeties to potential buyers as the real estates agents have said they are willing to give me a slice of the pie on selling (verbaly at the moment, but i wont act till its in black & white)????
JohnOriginally posted by grossrealisation:hi simon
A guy got into court here for swearing and you must learn to bite your lip with new investors and don’t be so hard on dazzling.Two points.
1. That guy got off.
2. What court would blame anyone for swearing at Dazzling?
Cheers [biggrin]
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
both are techicalities
here to help
Hi JLtarra,
yes, the higher the price the higher the return (generally).
If you have some time and want to get some experience with analysing deals, I know some investors who like to buy commercial property but dont have the time. I could split an assignment fee with you if I pass a deal onto someone who buys it.
If you are interested and have time, please send me an email and I will send you a list of criteria to look for in a commercial property.
Xenia
We buy properties in Adelaide. Immediate Cash Settlements, No Agent Fees.
[email protected]
phone 0412 437 582
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