OK, so we saw a deal one day. A nice established freehold medical centre with a steady trade in a growing area (in population terms) generally under serviced by doctors. Includes a bunch of doctors from a listed medical company doing a lot of corporate work and separate pharmacy, physio, pathology etc with everyone seeming to do well out of the co-location. Only eight years old and with good depreciation. Leases are well written but aren't quite as "water tight" as we would like if we had commissioned them ourselves.
Looking at the numbers reveals:
- Net yield over 10%, with all outgoings paid by tenants, including our costs of property management. We quite like the concept of tenants paying for the cost of collecting their rent!
- Budgeting the full costs of both equity and debt for the deal provides a net cash flow of $70k per year from the property. Better than a kick in the pants...
- The only fly in the ointment is there is only a couple of years left on the anchor lease. Can't have everything I guess... but there is a five year option and we would be genuinely surprised if they didn't take it up as they are making money and the setup is perfect for their operations.
Balancing up the pros and cons we thought it looked like a pretty good deal, so we bought it. Settled the other week.
After three solid years of looking for a decent CIP we have finally found something and jumped straight into the deep end. We shall find out in a couple of years time whether or not it was a good idea!
With many thanks to the forum members who helped us along this journey. You know who you are and your assistance has been invaluable. Thank You!
After all this time (including a 4 month + settlement) it's been quite a buzz and we're still coming down from the high...
Now, onto the next one...
Looking at the numbers reveals:
- Net yield over 10%, with all outgoings paid by tenants, including our costs of property management. We quite like the concept of tenants paying for the cost of collecting their rent!
- Budgeting the full costs of both equity and debt for the deal provides a net cash flow of $70k per year from the property. Better than a kick in the pants...
- The only fly in the ointment is there is only a couple of years left on the anchor lease. Can't have everything I guess... but there is a five year option and we would be genuinely surprised if they didn't take it up as they are making money and the setup is perfect for their operations.
Balancing up the pros and cons we thought it looked like a pretty good deal, so we bought it. Settled the other week.
After three solid years of looking for a decent CIP we have finally found something and jumped straight into the deep end. We shall find out in a couple of years time whether or not it was a good idea!
With many thanks to the forum members who helped us along this journey. You know who you are and your assistance has been invaluable. Thank You!
After all this time (including a 4 month + settlement) it's been quite a buzz and we're still coming down from the high...
Now, onto the next one...
