Hi everyone
I have been investing in residential property for a number of years, but now I would like to invest in commercial property.
I am currently looking at a property that has some vacant floor space.
The real estate agent has put a price on the building as if the building is fully tenanted.
I have looked at the figures and believe that the property is not worth the asking price. I believe that the price should be calculated only on the leased area.
Can anyone give me some information or feedback on the process you undertake when dealing with commercial property.
Thanks
SteveHi Steve
be very careful when you do your due diligence for the area you are looking in.
Especially check with council if there are plans for further developments in the area.
Talk to the tenants that are there but also talk to people in adjoining or nearby offices/shops…Cleaners and maintenance guys are great scources of info, they tend to know if tenants are happy, planning on selling(& not told landlord!) or unhappy and facing a divorce sale of their assets!Follow the advice in this sites books to look outside the square to scource the needed (potential) tenants prior to purchase.
Don’t be tricked into paying as per a fully tenanted building! and also check the clauses in the current tenants leases. They may have an option to leave if the premises are sold.
Our uncle invested in an industrial complex, didn’t check enough on his tenants needs and lost alot of money when half of them didn’t renew their leases!
Don’t make the mistake of thinking that business people won’t pay to relocate! I was unhappy with my first (business) landlord and at some expense relocated my entire shop to the complex next door. Conversely, you may be able to attract neighbours to you!I am now in SE Qld and there are an awful lot of empty retail buildings around here.
smiles,Kerri
[happy][buz2][build]Hi Steve,
RE Agents will generally price commercial property on a per square metre basis when comparing sales prices. Obviously the quality of the current tennants and their leases will affect this, but you are unlikely to get a great discount on unleased space unless there is a forced seller or the property is a lemon.
As you are new to commefcial property you might consider using a consultant to advise you on your purchase price, negotiating leases etc. I know a few such people and am happy to email you some contact details if you are interested.
Another thing you should be aware of is the very large difference in cost between different commercial lenders. This market is not like home loans.
Regards
Alistair
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