I would like to ask for some advice on where to seek finance. I have looked at a commercail property in Greensborough Vic – medical suite on good size block $450,000 with income $36,000 pa with tenant paying all outgoings. I own my own home $800,000 no mortgage and an investment unit worth $420,000 let at $1310 per month with mortgage payment of $1054 per month with CBA Bank > I have about $80,000 cash but I am not working as I have just returned from overseas. Does the deal look good and do you think I can borrow and from whom
ThanksNot enough fat in it for me.
only returning 8% yeild and you will haveto come up with at lest 30-40% of the buy price… I would keep looking and find a more attractive deal…. good spotting though. With commercial delas you could look at returns higher than 17% yeild as you have more of your cash invested in the deal.
Cheers
KiwiSue,
You are in a marvellous position – equity wise.
The deal you are looking at is 8% nett yield, which is probably higher than the cost of funds needed to fund the deal – hence +CF. You seem to have enough equity behind you to borrow the lot, and hence it’s a “put nothing in to acquire and continue to put nothig in when owned” type of deal….my kind of deal….
It also sounds like their isn’t a whole lot of work to do on the prop, so that is an added bonus.
Big thing for me is the value of the dirt….do you know what it is ?? I always look for higher than 85%….but then the buildings and tenants I get are pretty shabby too. Try and get this figure (land value divided by asking price) as high as possible to cover your behind. The CBA will also like this also, as if it all falls over, they have some surety.
Lease length ?? Mix of tenants ?? Those Dr’s can be pretty dodgy….
One negative thought though…..I have had 3rd party experiences with Dr’s offloading their suites to unwary buyers and then pulling out of the building. Not good. It hurt the purchaser’s alot…..took them a while to get back on their feet.
if it’s in a cracking good spot, I’ve also seen many a medico snaffle up the building if it ever comes up for sale….
If someone else owns it and the Docs aren’t interested in buying it….that would also give me cause to reflect. i.e. find out who the Vendor is….
You sound like you are in a good position to attack.
If you are into these type of deals…..maybe we should have a chat offline.
Hi Sue
Like Dazzling you are in an excellent position equity wise.
Many lenders however will take advatantage of an application for a Commercial Loan and charge a higher rate of interest and establishment fee.
Depending on what you are looking for from the investment and from the numbers you have given you should be able to borrow the full 100% of the purchase price plus acquisition costs and a rate sub 7%. Establishment costs and set up fees will be realtviely minimal.
Richard Taylor
Residential & Commercial Finance Broker
**Lodoc Commercial loans from 7.19%**
Licensed Financial Planner
http://www.yourstatefinance.com
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Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
Thank you all for some very valuable advice,. although the return is not in the plus 10% league, I am also looking at it for potential unit development. Land size is approx 130′ wide x 106′ deep and is on a corner. Currently a weatherboard built clinic, but fully renovated with 6 rooms. The agent tells me the vendors, are the operators of the business also,he claims they wish to sell in order to expand their businesses as they have another clinic. I do have some doubts of course. It is zoned residential 1 . The lease is already in place, from July1 2005 for 5 years automatic annual CPI review and 2 options of 3 years each Rent $3000 per month plus GST.
Would a broker be the way to go to get the cheapest loan – small or no deposit and sub 7% sounds really good.
Thanks so much for your help
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