Commercial Webinar wednesday night 6th feb

[James m Dawson]

HI Everyone, Im running a webinar this on Wednesday night at 8pm:
Will be talking about:Why I like Commercial Property.
What is Commercial property.
My Philosophy of Investing.
Steps to get started to replace your income.
Positive cash flow deals example : real life.
Increase equity by $600,000 quickly.
5 mistakes I have made.
And some time for questions if possible.
Regards
James

Click here to register > https://www1.gotomeeting.com/register/472698016

 

[ScottyB]

James,

Sadly i am on my way home mid flight and will miss this. Can you record it and distribute it afterwards for existing or potential clients who are unavailable?

Go to Meeting has the facility to do this i believe?

Regards

ScottyB

 

[Tatts]

Just signed up! Looking forward to it, thanks.

 

[M1zz]

Sounds like an interesting one, thanks James!

I look forward to it,

Daniel M.

 

[James m Dawson]

Hi , yes will post a replay link in the next few days after the webinar
james

 

[AXXO]

Hi , yes will post a replay link in the next few days after the webinar
james

Thanks James, I can't make it either as it's my Square Dance night for dancing.

 

[James m Dawson]

webinar replay

Thanks to every one who listened in last night. I will organise to get a replay online asap. I will post a link here
james

 

[Tatts]

James, until now I haven't even thought about commercial property as an option. The hardest part I can see is getting the ~35% deposit required without having any other assets to my name. However upon looking I have found some decent positive cash flow options for just over $100k!

I would be interested in a list of online resources you use to source commercial property? Just started using realcommercial for now...

Anyway thanks for your time Wednesday I found the webinar was professional and a big eye opener, cheers!

 

[James m Dawson]

Thanks to every one who listened in last night. I will organise to get a replay online asap. I will post a link here
james

Here is the link
http://jamesdawsonproperty.wistia.com/projects/qhedkiaps8

 

[AXXO]

Just finished viewing your webinar James. Thanks a lot and it was a great summary on buying commercial with great real life examples.

I emailed an agent a query today on Realcommercial.com.au for a Perth Commercial property and he tells me there are no such properties giving an 8% yield in Perth. They are all around 6% according to him.

I don't know how he's selling a lot of commercial stuff when he rang me back within five minutes from sending my email.

 

[James m Dawson]

comm returns

I often hear the same thing- someone calls an agent who says theres nothing around showing x return etc- dont give up the deals are out there. You might have to broaden your search to different locations
james

 

[Corey Batt]

Good work James, watching the webinar now.

It's great to hear someone providing easy-to-digest information on commercial property.

 

[chindonly]

Thanks James.

Just listened to the webinar and it was a good, simple explanation.

Quick question - outgoings in the main are mostly paid by the tenent.

Your calculations still show considerable outgoings that you pay, so I assume they are made up of:

- Property management fees
- Insurance
- Land tax
- Major building maintenance
- Common property maintenance and cleaning

Am I correct in my assumptions, or are there other items?

Thanks

 

[James m Dawson]

Thanks James.

Just listened to the webinar and it was a good, simple explanation.

Quick question - outgoings in the main are mostly paid by the tenent.

Your calculations still show considerable outgoings that you pay, so I assume they are made up of:

- Property management fees
- Insurance
- Land tax
- Major building maintenance
- Common property maintenance and cleaning

Am I correct in my assumptions, or are there other items?

Thanks

Hi Essentially all outgoings are paid by the tenant- but how they get paid depend on the lease. In the example i used in the webinar the current leases in place are set up that the outgoings are built into the rent ie out of the total rent of 78k there are 39k of outgoings to be paid- in that example you dont pass the account for any outgoings onto the tenant for payment- he is already paying in the rent.
The other way of doing it is to make the rent 39k pa and send him each account for outgoings as they come in, same result.

The main thing with commercial property is that everything is based on the net rent that you end up with after outgoings. And also that the total amount of rent the tenant is paying is the correct rent for the space.

So in answer to your question the list you have is correct except add rates .
regards
james

 

[china]

Really enjoyed the webinar. But I am yet to find properties giving a net return of 10% as you have presented. Most are 7% net, making them cash flow neutral.

 

[jingo]

Thanks James,

That was a very informative and helpful presentation. I've often read that its good to buy above the 1mil mark as tenant quality will be better and length of lease longer. I was interested to see you give examples in much lower price ranges, making com property accessible for those starting out.

Regards Jason

 

[Trogdor]

This was a very interesting webinar.

Some really good coverage of the basics, and very clearly presented.

The case study, however, had me intrigued (the Gold Coast example, leased to the REA and gift shop).

From memory the rent was 70ish K p.a. with outgoings of 30ish K p.a.

Presumably these outgoings had some massive body corporate due to the high rise nature of the building (above the ground floor retail) but still can't see how it was 30ish K p.a. Did I misread this?

If is it in fact true, I wouldn't touch it for 11% net yield. Last thing you want is a protracted vacancy where you have to cough up this type of money in outgoings yourself (which you'd have to do in that instance) plus debt service. Especially for a newbie young guy starting out as per the example given. I personally would be much happier on much much lower net yield with the usual 3k - 4k p.a. outgoings for other low value CIPs.

The other thing the webinar didn't touch on was finance - James do you take bank bill products, short term loans, or lengthy term loans?

 

[Trogdor]

Really enjoyed the webinar. But I am yet to find properties giving a net return of 10% as you have presented. Most are 7% net, making them cash flow neutral.

Seems from the example provided the rub is the massive outgoings which you'd have to shoulder in a vacancy.

Just went and re-read James post to the example. I.e.

78K gross
39k outgoings
39 net rent
11% yield (assuming 355k purchase all in).

In a vacancy (say a downside 6 months) you'd be paying 39k + interest out of your pocket.

Alternatively, I'd always chose a 7% net property with characteristics more like:

Gross rent
28k gross
3k Outgoings
25k net
7% yield on same 355k

Much less exposure in a vacancy to blowing yourself up. Especially as your portfolio grows.

Also would prefer this even further if it was 25k net rent (i.e. tenant pays outgoings themselves, not just a gross rent figure) rather than 28k gross rent, but thats going off topic.

On our two CIPs the outgoings are well under 10% of net rent, and leases expressed as rent + outgoings + GST (rather than gross rent).

 

[china]

Thanks Trogdor for the info. As you are aware, I am currently searching for an IP in which to invest and commercial seems a likely contender.

 

[SYD]

Hi James,

I enjoyed your webinar.

I was also surprised by the high outgoings for the Coolangatta property. Can you please give a breakdown of these outgoings? I agree with Trogdor's comments regarding the risk when the property is vacant.

I also noticed you have recently sold the Mackay property which you featured during the webinar. If you do future webinars I would be interested on hearing about the selling side of commercial properties including the reasons why people sell and the nuances of dealing with commercial property agents.

SYD