Or would it be;
"Bari-Tone" and "Soprano"?
Very good..........It took me a sec. to get it though!
basic question about lease in Commercial Property
- Thread starter Edmond Dantes
- Start date
Very good..........It took me a sec. to get it though!
hi Big Tone
maybe a couple here could give it a go first to see if they understand.
if not
then no problem
I like people to understand
and then if not learn.
with any form of learning you need to understand the style of the writer
and if people here can't work that out
and they can
then I will translate
maybe a couple here could give it a go first to see if they understand.
if not
then no problem
I like people to understand
and then if not learn.
with any form of learning you need to understand the style of the writer
and if people here can't work that out
and they can
then I will translate
Ultimately the yield on the property needs to reflect the risk of vacancy.
ie if you consider for example a net 7% return is reasonable on your investment, but that there is a risk of the property being vacant for 1 year every 6 years, and say your rates etc work out to 3% of the value of the investment (and these were paid by the tenant), then to average your 7% each year for 6 years you will need to be netting 9% each year the property is tenanted.
You should also bear in mind that with a national tenant, even if the premises are profitable they might not meet that business' return on investment criteria.
There are ways to mitigate the risk of vacancy:
a. the lease should provide that notice to renew is given several months before the lease expires
b. the price you pay needs to reflect the risk of vacancy.
c. you need to do due diligence when you buy eg is the property able to be used by other types of businesses or is it specialised premises, is the property in a desirable location for businesses. If the usage changes will the rent change. Are you the bunny who is going to have to pay to convert the premises or to reinstate the premises to their original condition? Even in a small country town a difference of 100 metres can have an effect on your tenant's turnover depending on the type of business they are in. You need to be proactive in considering consequences and opportunities rather than simply reacting.
Commercial/industrial property is not the same from the risk factor as residential.
Reread some of the threads Dazz has on parts of his investment journey. Know your lease. Do your reviews and keep your rents at the right levels. Yes industrial/commercial property can often be easy - the tenants change their own light globes, but at times you are going to have to actively manage or ensure your team is on top of the task.
The risks are substantially higher with commercial/industrial but the benefits can also be higher provided you have done your diligence.
I have a multi tenanted industrial property which was badly managed when I bought it 5 years ago, rents below market, several vacancies. Rents have been increased, property has been spruced up. Even with the downturn in the regional economy it is situated, which has reduced occupancy in the last 12 months, it is giving me a 20% return on my purchase price.
ie if you consider for example a net 7% return is reasonable on your investment, but that there is a risk of the property being vacant for 1 year every 6 years, and say your rates etc work out to 3% of the value of the investment (and these were paid by the tenant), then to average your 7% each year for 6 years you will need to be netting 9% each year the property is tenanted.
You should also bear in mind that with a national tenant, even if the premises are profitable they might not meet that business' return on investment criteria.
There are ways to mitigate the risk of vacancy:
a. the lease should provide that notice to renew is given several months before the lease expires
b. the price you pay needs to reflect the risk of vacancy.
c. you need to do due diligence when you buy eg is the property able to be used by other types of businesses or is it specialised premises, is the property in a desirable location for businesses. If the usage changes will the rent change. Are you the bunny who is going to have to pay to convert the premises or to reinstate the premises to their original condition? Even in a small country town a difference of 100 metres can have an effect on your tenant's turnover depending on the type of business they are in. You need to be proactive in considering consequences and opportunities rather than simply reacting.
Commercial/industrial property is not the same from the risk factor as residential.
Reread some of the threads Dazz has on parts of his investment journey. Know your lease. Do your reviews and keep your rents at the right levels. Yes industrial/commercial property can often be easy - the tenants change their own light globes, but at times you are going to have to actively manage or ensure your team is on top of the task.
The risks are substantially higher with commercial/industrial but the benefits can also be higher provided you have done your diligence.
I have a multi tenanted industrial property which was badly managed when I bought it 5 years ago, rents below market, several vacancies. Rents have been increased, property has been spruced up. Even with the downturn in the regional economy it is situated, which has reduced occupancy in the last 12 months, it is giving me a 20% return on my purchase price.
Yep.............whatever!!!!!!!!!!!!!
I'll have a go at translating because, as usual with GR, it is worth understanding...
Main points:
- Check out Rich Dad Poor Dad and Network 21 for ideas on the benefits of having many, diverse income streams.
- Understand income streams and you understand how to group a number of investors together to buy multi million dollar properties through networking, leverage and the right structure / finance.
- GR has posted a number of times on the benefits of syndication so check these posts out (he acknowledges this is his business so this advice may not be impartial).
- It may not be easy to understand his posts but the info is there if you want to find it.
- If you can't say anything good about someone don't say anything at all.
- Usually it is best to keep your opinions to yourself if they don't add anything (constructive criticism) to the conversation.
- Don't be overwhelmed with the possibility you might not like someone in a syndicate and overlook the financial benefits this structuring provides regardless of that. Everyone has a clearly defined place in the structure and there is therefore no need for personalities to get involved.
- GR does this as part of a team and network of investors / advisers / financiers etc and everyone has benefitted on an ongoing basis who has played for the team.
- There is a limit to the details he can provide on a public board.
- If you can't adjust your reading to GR's style of writing then it's not him who misses out on the information, so it is better to adjust your own approach rather than expect others to adjust theirs, particularly if they have more knowledge / experience.
- Sorry for hijacking the thread but it needs to be said.
- Regarding vacant shops, there may be a number of reasons he won't go into now but sometimes there are good reasons so be prepared.
That's just some of what I got from that post anyway...
As usual GR - Thanks!
Oh.........reeeaaally!
I will have to question you on that Grossreal?
If you read some of your own posts you may find that you do!
Big Tone
Thats your opinion and totally incorrect.
Yet another classic case of a little guy scratching around in the dirt with his piddly plastic bucket and spade, poking his head up out of the sandpit, so that he can yell at a guy walking past who is successfully running a fleet of draglines....."What would you know buddy ?? Your opinion doesn't count for _____ "
I find that aspect of this forum, so typical of the Ozzie vernacular, the worst of all.
You are a good guy for trying Grossy.....and thanks for the interpretation HiEquity. You both wasted your time on this one though.
I find that aspect of this forum, so typical of the Ozzie vernacular, the worst of all.
You are a good guy for trying Grossy.....and thanks for the interpretation HiEquity. You both wasted your time on this one though.
I am a little disappointed in this grossreal, and this is for why,
You state that you are a team player and suggest that someone (namely myself) is not able to comprehend your post that they are not "team players" which is fine, but if you are a team player like you stress in your posts then maybe, just maybe you too could be a little more flexible with writing skills.
You obviously ".............wish someone to change to what they wish something to be."
Big Tone
Are you still upset over the other night?
I thought we got past that?
I cant help it that your dry humour isnt funny, go look for some more material.
Better still, go back and read my post and take a good long hard look at yourself in the mirror.
Allright, you are a milti cazillionaire who hates resi property, we know, we know already.
It will take a lot more than that to upset me, especially when I am playing in my sandpit with my liitle bucket.
Build a bridge brother.
Big Tone
