From: Owen .
I've been offered a commercial property but I have no experience with commercial so I thought I would ask those in the know what other things I should looking at or asking about.
The deal is a small retail outlet in a large complex in Sydney operating as a hairdressing salon. They salon has just signed a new 5 year lease at $825 per month. Asking price $99k neg. so it's a 10% return plus depreciation on common areas. Strata fees are $260 per year.
So the numbers are pretty basic but what else should I be looking at? The lease to ensure has annual reviews/rises factored in? Should I/can I look at the hair salons books to ensure they will be around for a while? How do I find out comparable rents/prices etc in the complex or in the area? What about previous sale info for commercial properties in the are? Do I just value it off the return? How do I find out the expected returns for an area? Is any of this relevant if it's got a stable business renting it and it's putting money in my pocket?
I haven't talked to the owner yet but I am getting together for a coffee this afternoon. Be brutal with me because at the very least it will be interesting learning experience for me.
Owen
"Gambling promises the poor what property performs for the rich – something for nothing"
I've been offered a commercial property but I have no experience with commercial so I thought I would ask those in the know what other things I should looking at or asking about.
The deal is a small retail outlet in a large complex in Sydney operating as a hairdressing salon. They salon has just signed a new 5 year lease at $825 per month. Asking price $99k neg. so it's a 10% return plus depreciation on common areas. Strata fees are $260 per year.
So the numbers are pretty basic but what else should I be looking at? The lease to ensure has annual reviews/rises factored in? Should I/can I look at the hair salons books to ensure they will be around for a while? How do I find out comparable rents/prices etc in the complex or in the area? What about previous sale info for commercial properties in the are? Do I just value it off the return? How do I find out the expected returns for an area? Is any of this relevant if it's got a stable business renting it and it's putting money in my pocket?
I haven't talked to the owner yet but I am getting together for a coffee this afternoon. Be brutal with me because at the very least it will be interesting learning experience for me.
Owen
"Gambling promises the poor what property performs for the rich – something for nothing"
Last edited by a moderator: