CPI value

From: Rosemary McKenzie


Can anyone tell me what a generally accepted source for the CPI value would be? If in a lease it is stated that the annual increase would be the CPI which source would be assumed?

I have done and search and come up with an array of values which vary according to towns, quarters, adjustments, etc.

Thanks.
 
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Reply: 1
From: Steve Piggott


The cpi increases are respective of type of commercial premises and also the locality.
Generally retail/commercial leases range from 3-8%pa. I would look at the existing lease on a property and also get comparatives from commercial agents for similar properties in the area.
The best thing about a commercial lease is that you can manipulate it to create instant cashflow and/or equity with the yield, cashflow and capital worth ratios.
Value adding and having higher leases can increase the net capital value substantially.
If residential investors understood these factors more they would flock to commercial and retail investment property.

Happy Investing Neb :)
 
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Reply: 2
From: Kristine .


Rosemary

Real Estate uses a standardised CPI, and this figure can be obtained from your local commercial property manager, the real estate institute, probably your bank manager and certainly your accountant.

However, if the tenant says 'can't pay any increase this year' what will be your response to that? Once you put your toe in the commercial water it's a whole new ball game to residential.

Not the least of which is: who else would want to live in the property under consideration?

By the way - I'm a very happy commercial landlord with a very happy tenant who is earning a living from their business in my premises. I wish them the five blessings every time I go past, watching the customers going in and out their (my) doorway. Commercial returns in my area have swung back from a horrifying 14% yield of two years ago, to a much more satisfying 7.3 - 7.9%, as proven by some auction activity in recent months. But although this growth has been a long time coming, I personally consider my beautiful ex-bank to be the Jewel in the Crown. Every investor should have one!!!

Good luck

Kristine
 
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Reply: 2.1
From: Will G


Can you shed some light on the Pro's of commercial IP's. This is the first time I have heard about the good points.
 
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