Hi, I've been looking more and more at commercial but I'm still seeing plenty of vacant properties around. Has anyone here had a property that's been vacant for a few weeks or more and what kind of impact did it have on you? Did it affect you financially? Did it cause problems at home (bit of a worry). I know vacant residential properties usually rent out reasonably quickly but commercial properties can take a LOT longer and I want to know what I might be in for. Thanks![/QUOTE]
G'Day tubs
Yep! Got a prime position main street shopfront vacant - been empty since January and it's now November.
At not getting $2,646 pcm plus outgoings that is now just about $30,000 that we have had to find from general housekeeping so far this year.
If retail is still vacant now - in the lead up to Christmas - then it's likely to be vacant for another six months until people assess Christmas trade figures and start to make plans for 2012.
Hey, we are too old, salty and long in the tooth to take vacancies out on each other. That's a young person's game! We just trudge about making up the payments and not letting it get to us.
Commercial property investments may sound glamorous, but when the market is off the boil it is seriously off the boil. We have owned this property since mid 1997 and it has never been vacant before. It's not just the rent, it's the start up capital and the operating costs of a new business that people are not confident about.
However, when a commercial property is vacant it has no assessable value. Commercial property is calculated on the capitalised rate of the rent income. Most commercial lending - if secured against the commercial property - still works on the loan = lease formula.
It is only because banks can take residential security and lend for commercial property that borrowers end up with 30 year loans for the investment.
So if you are looking at getting into commercial, then now, while the market is on the floor is sometimes a good time to get into a position which will rebound later.
When we are back in the next prosperity cycle, and tenants are clamouring for office / retain / industrial / storage space, you might find yourself priced out of the market.
Right now, vacant property is a whole lot cheaper than a properly tenanted property, but the cost of that cheapness is no rent.
Cheers
Kristine