Help please....this is my first post....
Have just had an offer accepted on a commercial (office) property, my first such property, and now it is due diligence time. Has anyone seen or do they have a "checklist" so that I can make sure I cover all the bases?
Yes you are right. I briefly inspected the building and land which is currently in the 20th month of a 5 year lease with a 5 year option. I was already familiar with the building...it's now leased to a Commonwealth Dept....the fitout is a very good quality job.
The numbers indicate a 10.6% net yield. I'll be having my lawyer reviewing the lease, the accountant on the depreciation schedule, and I will get the building and AC generally inspected...but it was purpose built for the CES to Commonwealth standards about 10 years ago so it should be in reasonable shape. I believe I need to verify the actual outgoings expenses to ensure the yield is accurate and have about 30 days to do the rest of the due diligence. Anything else to consider?
The Commonwealth's property strategy is to set a hurdle rate, value the potential sale price of the building, the expenses of maintaining and local rental rates in the area. If the building fails to meet the hurdle rate, it sells. Newspapers report that the Russell Hill complex which houses Defence HQ is to go.
The Commonwealth has flogged off quite a lot of its property now, although I wouldn't expect too many bargains.
Renewal of the option is not a gimme by any means, but the Commonwealth is hardly likely to default on a lease even if the agency is disbanded.
I just twigged that there were no management fees shown in the outgoings.
The checklist that Paul provided is a pretty good starting place...I have 30 days to be fully satisfied with my own due diligence enquiries and show finance approval or the offer lapses.
It's not an employment national office (they are going out of business) and it's a private vendor.
I have had a very quick look at the lease and the specs on such things like AC seem very stringent...air flow rates...and other stuff.
Will be going through the lease and requesting records and such of the vendors in the next few days?
A general question...what and how much do you ask for from the vendors ...and what will they reasonably give to you? Can you ask for all related documents and plans?