Hi, my name is Sam and I am very new to investing. I have read a few books. I found this property which to me seems like an absolute bargain. However being a temporary citizen at the moment, I am not allowed to follow through with any deal.
This is a link to where I found the property http://www.gumtree.com.au/s-ad/camden/property-for-sale/massive-building-with-5-tennants-rental-65-000-pa/1008895323#
If you guys could check it out and see what you think. I would like to know if someone benefited from this post. If you make a really good deal, I would be wiling to accept a finders fee
Thanks
Sam
$65k gross (with probably 20% outgoings), no lease expiry profile, no due diligence on fire/mechanical/hydraulic services.
So the headline rate might look good but at less than 8% net for a unique rural property which does not appear to have any really good leases in place (highest payer is likely to be the hardware/storage).
I personally won't say it's a great deal…But it is a ok deal..
– Commercial rates, so this will eat into your return quite a bit
– Being an old building Comm building im presuming outgoing can be a bit hefty
– Regional town
– Can not leverage on the LVR
– Haven't been too Gundagai but according to the beuro average temp is 30-35, with lowest in winter at 22 !!! a bit too hot for my liking…
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Bureau of Met must be having an off day. It gets quite cold in Gundagai – its about 450km South of Sydney & past Canberra on the way to Victoria. Yes hot in summer but bitter in winter.
I have seen this one about four months ago.
Its actually quite an acceptable buy. Its central Gundagai … and its in a good position to be an ongoing commercial facility. Your risk is split among five tenancies, so there is no single core dependancy. From inspecting .. it was containing a gift shop and a clothes shop last time I saw it. I dont think there would be much variation in those tenancies.
However .. it is a commercial property and not a residential. You dont get anywhere near the same rate or flexibiity on commercial properties that you do on residential ones.
Differences? Expect to be paying GST (usually factored into rents) on your usage .. and on your transfers of sale. Commercial property attracts GST on commercial usage. You can expect your rate to be about 2 points higher .. and your chances of fixing that rate is possible .. but nowhere near as easy.
I look on an investment for its further potential. This one stuck with me as an old building with steady tenancies that has ceased to be of any utility value once the current tenants leave. In other words .. no real upside. Land position is great, but the building is old and wearing out. If you go into this deal .. expect costly repairs or upgrades within the next ten years.
I would say it is a decent deal since you have 5 steady tenants, but I would recommend you to check if the building was maintained well due to its age. I am sure you do not want to get a building and then spend a fortune on repairs.
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