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  1. Mike

    Estimating buy price - Part 2

    Final thoughts... Les>> Ain't it great - Mike has a BOOK FULL of them. Sorry, folks, they are the only two examples in the book referred to in post #21. They were included in a chapter called "How to find your bargain property". The author was making the point that knowing the approx true...
  2. Mike

    Estimating buy price - Part 2

    Further thoughts... The biggest difficulty everyone had in that exercise was estimating the risk of buying the shop without a lessee even though a good tenant was lined up. The exercise would have been simplified if Shop D was being sold with the Good Tenant already under lease. It would just...
  3. Mike

    Estimating buy price - Part 2

    To summarise the bids: GeoffW Rent: $25,520 pa. Yield: 9% (Same as baker) Tenanted value: $283,500. Discounts: None Final Bid: $283,500. Les Rent: $25,520 pa. Yield: 8% (Rates tenant better than baker) Tenanted value: $319,000 Discounts: $10,000 (6 months interest); $59,000...
  4. Mike

    Estimating buy price - Part 2

    Hi Folks, Well, the time has come to wind this great thread up. Thanks to everyone who participated, especially GeoffW for putting in the first offer. It got the discussion moving and led to many interesting points. I've learned a lot from both Part 1 & 2 and will share some of those...
  5. Mike

    Estimating buy price - Part 2

    Hi Folks, Thanks everyone for your bids so far. The discussion has been most illuminating. Please get your final bids in by 9pm EAST because I'd like to post the answer and some final thoughts. Mike
  6. Mike

    Estimating buy price - Part 2

    Hi Les, This is a reply to Post #11 which is your second offer. Interesting plan but it seems flawed. Point 5 suggests your intent is to purchase Shop D and install Good Retailer there. You say that if you don't get Shop D then the backup plan is to buy Shop C, boot Mr Dodgy out and put...
  7. Mike

    Estimating buy price - Part 2

    This post is a reply to Les' post #10. Unfortunately, Les got in too quickly and didn't see it before he posted #11. Thanks Geoff and Les for having a go. Here is a summary of your views to date. (Trying to minimise any more sore heads) Geoff: Says quality of potential tenant for Shop D...
  8. Mike

    Estimating buy price - Part 2

    Hi Geoff, I applaud you for being first up. The exercise is not easy because you have to make a guesstimate on the quality of the tenant which translates into a yield figure. If you use yield to get the property value then it's obvious that a correct determination of what constitutes a...
  9. Mike

    Estimating buy price - Part 2

    Hi Asy, Good post. This is the kind of thoughtful discussion I hoped would be raised in this thread. It would be pointless to make it just an exercise in maths. It's all about learning so if anybody has any real-life experiences, please share it with us so we can all learn something...
  10. Mike

    Estimating buy price - Part 2

    Hi Folks, I'm starting a new thread for the second exercise because the first thread is already long enough and besides the method for calculating the value of a commercial property investment is different to that of a residential property chiefly, I think, because the risks are greater. (I...
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