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There was a shop in Melbourne CBD that is leased to Telstra.....50 sqm on the corner of Swanston and Collins. Strata title. Rent is $500,000. Price? $10m (Sold).

5% yield these days in good shops is the norm.

Because you are paying $28k per month and are being quoted $5m for the property. $28k pm = $336,000 pa. Divided by $5m is 6.xx%, give or take.

Spludgey seemed to think that 6% yield is too low. I disagree as Melbourne CBD shops that are in good locations sell for far less than 6%.

To be paying that much rent (And for it to be available for sale) it would have to be on a major shopping strip or in the CBD. A rental yield of 6% is not such a bad thing - try buying any decent shop in Melbourne for over a 6% yield - it just won't happen.

If your business is profitable and you have the capacity to do it, then I would. However, if your capital is tied up in other things (coming up for a CIP deposit is a lot of dough at those levels) such as business expansion then you may not be able to do it. I would stretch for it as long as the...