First Commercial Property Journey

[Dazz]

A few of those are in my target list also - particularly Dubbo and Ballarat.

These might help to start off your search swith.

Dubbo - http://www.realcommercial.com.au/property-industrial+warehouse-nsw-dubbo-501092639

Ballarat - http://www.realcommercial.com.au/property-industrial+warehouse-vic-ballarat-500715979


Good luck with your investigations.

 

[chindonly]

Hey Dazz - is this the type of commercial you started out on?

The Ballarat one looks interesting.

Extra land for possible future development, long-term tenant, 8% yield.

Only 3% annual increase though - perhaps this is the norm in regional?

 

[Scott No Mates]

Start with a raw block and go from scratch. It means that your due diligence has to be up to scratch.

 

[Dazz]

Hey Dazz - is this the type of commercial you started out on?

No, we were absolutely petrified and completely clueless, so we started off buying an industrial gymnasium with a hardcore operator who attracted all of the huge guys around town.....none of these nancy leotards and spin bikes.....just big heavy plates and sweat and grunt.

It was locked up with a 10 year Lease. We settled on the 1st anniversary, so gave ourselves 9 years to figure out what was going on. All the work and negotiations had been done for us and we paid the price in the purchase.

We thought that was safer than buying something raw and then fumbling along not knowing what to do.

It took about 4 months to get into the swing of things, get comfy with the lingo and the process and purchase something else more adventurous.

Last year the Lease expired and we simply sat down with the Tenants, jumped the rent 50% and signed 'em up for another 10+5.

Job done. Don't need to visit the property again 'til 2023....where it'll be a 1 page letter needed to take it out to 2028. I'll let my daughters take over the negotiations next time around.

 

[Scott No Mates]

Last year the Lease expired and we simply sat down with the Tenants, jumped the rent 50% and signed 'em up for another 10+5.

You should be ashamed of yourself Dazz, you gave them an option Hopefully you have the rent review locked in on a ratchet.

 

[chindonly]

No, we were absolutely petrified and completely clueless, so we started off buying an industrial gymnasium with a hardcore operator who attracted all of the huge guys around town.....none of these nancy leotards and spin bikes.....just big heavy plates and sweat and grunt.

It was locked up with a 10 year Lease. We settled on the 1st anniversary, so gave ourselves 9 years to figure out what was going on. All the work and negotiations had been done for us and we paid the price in the purchase.

We thought that was safer than buying something raw and then fumbling along not knowing what to do.

It took about 4 months to get into the swing of things, get comfy with the lingo and the process and purchase something else more adventurous.

Last year the Lease expired and we simply sat down with the Tenants, jumped the rent 50% and signed 'em up for another 10+5.

Job done. Don't need to visit the property again 'til 2023....where it'll be a 1 page letter needed to take it out to 2028. I'll let my daughters take over the negotiations next time around.

Interesting Dazz. I have a background in gyms, so that was actually a brave move. Many don't last that long!

Is there anywhere on here where you tell your whole story? Would be a great read for those interested in the commercial route.

 

[chindonly]

Start with a raw block and go from scratch. It means that your due diligence has to be up to scratch.

We do this now at work, but for a charity and for our own use.

I would rather have the first one tenanted for an extended period.

Getting the first tenant after building - to me would be one of the major risks with this strategy.

 

[Scott No Mates]

We do this now at work, but for a charity and for our own use.

I would rather have the first one tenanted for an extended period.

Getting the first tenant after building - to me would be one of the major risks with this strategy.

All comes down to how much risk you're prepared to wear. If you build the right product, at the right time it will work.

 

[chindonly]

All comes down to how much risk you're prepared to wear. If you build the right product, at the right time it will work.

True - but you can't control what else may come on line at the same time.

 

[Scott No Mates]

You can't control it but you can be aware of it by reviewing the DAs at council. If you know what has been submitted, that is at least the first step in planning your strategy.

 

[long88]

hi all,

what is the current sq/m acceptable for offer in south east area, such as dandenong/keyborough.. and what do you guys think of the area ?

currently it is around 1400-1800/ sq meter from the asking price.

obviously there is a lot of smaller size (less than 200 sq) in the listing, and with the return of 5% gross, it is not really worth buying anything at all.

thx

 

[John_]

Same boat here, also looking at first commercial property however total of 6m will try and get 3 different sites to spread the risk, that ballarat one looks decent if the hold onto lease.

 

[Scott No Mates]

hi all,

what is the current sq/m acceptable for offer in south east area, such as dandenong/keyborough..

Gold or scrap metal?

Without a brief there's a big disparity.

 

[long88]

for commercial shed..

just wondering on the vendor expectations.. as about to make offer on some.


how come there is gold/metal reference, is the area full of recycle ?

Gold or scrap metal?

Without a brief there's a big disparity.

 

[Scott No Mates]

Not knowing the area but needing to know your expectations. If you were after a 50 year old 'tin shed' or top of the range facility with precast walls, glass office, 10m internal clearance etc - hence the price difference between scrap and gold - the land value won't vary much but the construction or replacement costs/depreciated values vary significantly.

Your offer may be based on net yield if the site is fully developed & leased through to what you think that the site is worth once you undertake development (less development costs and profit).

 

[long88]

thank you for that.

what sort of new development costs (ie: concrete shell with steel beam standard stock, with (male &Female toilet and 1 kitchen), say for 200 sq costs ? i was told it is about 1200/sqm (2 year ago pricing from someone who built) ,and based on current listing.. current scrap is asking $1400-1600/sqm


was it the land that appreciates that translates into the higher /sqm asking price ? (my residential holding rate notice had jumped almost 50% as well near the area).

when will the rent catch up before we can see yield starting to go up (in general) ?

probably million dollar questions there... (if i know the future type thing). but from as a learner.. i should have asked the questions.

thx

Not knowing the area but needing to know your expectations. If you were after a 50 year old 'tin shed' or top of the range facility with precast walls, glass office, 10m internal clearance etc - hence the price difference between scrap and gold - the land value won't vary much but the construction or replacement costs/depreciated values vary significantly.

Your offer may be based on net yield if the site is fully developed & leased through to what you think that the site is worth once you undertake development (less development costs and profit).