I already own a couple of IPs – well the bank does. I’m now looking at a retail shop in my area up for auction next month. The numbers crunch well, but my concern is that even with the location if the current tenant leaves I’ll be left servicing the loan with funds best spent elsewhere. Does anyone else have commercial premises? What pitfalls have you experienced? Any advice to offer? Tanks
If I don't win the auction then no worries - just wait till the next one comes up.
D
Ok, on a more constructive note
Have you read the lease ? How long is it, what security is provided, what is the make good clause? WHat is the rent $psm and what is the outgoings clause ? Who owns the fit out ? When does it expire, are there options and if so at what rent?
Do you know what the surrounding shops are being rented at ?
What's on the slab for competing developments ?
Is it a food shop, could it be one ie 3phase power, trade waste, grease traps ?
What incentive was required to get the tenant in ?
Are there any arrears, what is the rent payment history like ?
Level of vacancies nearby ?
Tenant history ie stable occupation.
What relationship does the tenant have with the seller ? Ie is the rent artificially high to secure a higher sale price?
What is the cost if running the property (outgoings) ?
Is there a report on the condition of the building ie asbestos, what was types of tenant have occupied it in the past ?