Commercial property in Wagga Wagga- SWOT

Discussion in 'Commercial Property' started by geoffw, 3rd Feb, 2014.

  1. geoffw

    geoffw Untitled

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    Here's another property, which has been sold, for discussion. It's a much smaller property than the Queensland one, so it may be in a range people could afford.

    http://www.realcommercial.com.au/property-retail-nsw-wagga+wagga-5835711

    Strengths
    .Excellent positive returns
    .Affordable- sold for $195,000
    .Long lease in one unit. Seven years gives a better chance for a bank loan- although it could perhaps be bought easily with existing equity for many

    Weaknesses
    .Short lease in one unit
    .Not a desirable part of town. Google streetview shows lots of graffiti.

    Opportunities
    .Possibility of letting out one if the lease option is not taken up
    .Smaller building on a larger block of land

    Threats
    .Shop goes out of business
     
  2. beachgurl

    beachgurl Member

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    You'd need to have a high risk threshold to buy that in kooringal. While the area is gentrifying its not somewhere that a local businessman would want to set up shop. Countless suburban shopping strips in low demographic areas get spruced up, lots of for lease signs, the local supermarket starts bringing in more stock and within 6 months its downhill again and shops still for lease. I saw this happen at south maroubra a few years back.
     
  3. Xjas

    Xjas Member

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    I know that building, just down the road from Kooringal high where I went to school.
    It doesn't look a lot different to what it did 15 years ago. I think that is still a very rough area, most of the trade for business' in there would be from the high school which I'm guessing faded away when a Maccas was built at the Kooringal mall which is only a few streets in the other direction from the school.
     
  4. crest133

    crest133 Member

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    True, not a good area, even a Mexican Restaurant would struggle there Geoff.
    My motel near the Wagga hospital is going well though, except for the 5 weeks of roadworks just started out the front. Thanks RMS. But Wagga is such a strong economy.
    Cheers
    crest133
     
  5. Scott No Mates

    Scott No Mates ...and people wonder why?

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  6. crest133

    crest133 Member

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    underlay underlay
     
  7. Scott No Mates

    Scott No Mates ...and people wonder why?

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    Well it is down your way Crest, thought you might be interested.
     
  8. crest133

    crest133 Member

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    Hi Scott.
    Appreciate that, thanks, trying to focus on motels and broking, but will do a post on that after a discussion with the mods.
    Cheers
    crest133
     
  9. Richard Feynman

    Richard Feynman Mortgage Broker

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    Yep, valid points.

    And yes, it is still a rough area.
     
  10. geoffw

    geoffw Untitled

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    It is a very rough area.

    I have posted on this property specifically because I bought it. I knew what the area was like- but the business seemed to be running quite well when I was there, and the yields appeared very good. And it was within my budget.

    I would not have bought a resi in that area, but I thought that it was a solid enough proposition as a comm.

    It hasn't turned out that well.

    The business wasn't what it had appeared and the owner has closed shop. She knows she owes money for rent and is paying in dribs and drabs, but is getting a long way behind. If the debt gets too big there is a guarantor on the lease, but I'd prefer not to go there.

    There's a few vague possibilities but nothing much.

    She would love for me to lock her out but it's not worth my while to do so.
     
  11. D.T.

    D.T. Property Lookerafterer

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    How was the biz different than appeared?
    Is thr 2nd part still rented?
    Can you evict the 1st part, keep their bond as rental in lieu and find another tenant?
     
  12. TPI

    TPI Member

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    Do you have any borrowings against the property or was it a cash purchase?

    At this price point I feel you are better off with unlisted property trusts, private property syndicates or A-REITs if you want exposure to commercial property.

    Even bank shares would be better for predictability and reliability of income.

    Did you find this yourself?
     
  13. TPI

    TPI Member

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    What is the zoning?

    If things don't improve can you convert it to residential units?
     
  14. geoffw

    geoffw Untitled

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    I don't know how the biz was different. I must have been there at a busy time, which wasn't sustained.

    The second part wasn't extended past the first one year option.

    There was no bond (not my lease) but even if there had been finding another tenant would be very difficult.
     
  15. geoffw

    geoffw Untitled

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    I used LOC.

    Alternatives aren't much good now that I have the property.

    It was sourced by a well known property investor who is a member of the forum.
     
  16. geoffw

    geoffw Untitled

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    Zoning is mixed.

    Resi would be less desirable than comm in this area.

    At least I have the legal right to collect rent as it stands.
     
  17. TPI

    TPI Member

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    Yeah a bit late for you, but maybe for others considering the same thing.

    I wonder how much experience your buyers agent had with commercial over residential.

    As you say, at least you have your legal rights you can try to enforce if needed.
     
  18. Corey Batt

    Corey Batt Finance Broker

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    Might be best to try cop it on the chin and try see if you can find another business which can operate there.

    Or you can try pile more money into the building renovating hoping that this may bring a better quality tenant, but that's a risk and a half.
     
  19. geoffw

    geoffw Untitled

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    We're trying to find a tenant. The leaseholder wants out and is ok to pay for the advertising.

    I'm happy to renovate for a tenant with a lease.

    There's a brand new community centre next to the playground behind. That seems to give a slightly better feel to the neighbourhood.
     
  20. DJBarnstar

    DJBarnstar Member

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    Surely Geoff, with a good paint and a clean up you can get someone to take a lease on it?

    Your outlay isn't that big and as you're posting it on the forum, so it's more academic than a fungible threat?

    I like Wagga. I met my wife there and spend plenty of time there still. I don't think it's as bad as some make out.