What should we do with $1M

[BMV]

Balance your portfolio

In response to your article what to do with the 1 million available funds:

I suggest that you balance out your portfolio. Perhaps a balance of cash in the bank and property is sufficient. The question is what property? It really depends on your current income status. If you have a high taxable income I recommend that you buy new whereas if you are handy and have lots of time on your hands buying a couple fixer uppers could be the go.

At the end of the day the key is that you make money when you buy not when you sell. Make sure you are buying Below Market Value (BMV) I would even go as far as getting an independent bank valuation and putting in offers below the bank valuation. If you do this, devise an effective strategy/plan and stick to it I am sure you will do extremely well.

"The battle is won before it is fought"
-Sun Tzu

 

[Peterw]

Wylie, here you go with the land tax.

http://www.osr.qld.gov.au/land-tax/about-land-tax/land-tax-rates.shtml

The IM should have the current SV, for you to do the calculations. RPData lists it at $247,500. The lease rate of $280 roughly per metre does not seem high, so should the bank leave, you will then have to see who else you can get in. We have St Vinnies paying $350 here, so I dont think it should be hard. I dont know the dynamic of Banyo though, so it would be worth trying to find our what the going rentals are. Looks like shops on either side. One other observation, is that the width of the building, looks like the allotment width, so what is the arrangement with access to the rear carparks?
Hope that helps

 

[Dazz]

One other observation, is that the width of the building, looks like the allotment width, so what is the arrangement with access to the rear carparks?

Hi Pete,

I think the 2nd and 3rd photos on the website answer that question fairly easily. It's clear what the arrangement is.

 

[Peterw]

Dazz, RPData does not show any easements over the adjoining properties.

 

[wylie]

I had to work today, but just got this email (6pm) -

This property has had a offer which the seller accepted today subject to various conditions. If there are any issues which makes it available again I will let you know.

So, for now, this is under offer. I wonder if someone from SS has made an offer. If so, I'd love to know more when there is some certainty.

Thanks for all the help and advice.

I think I will keep looking for something commercial or an IP bargain that we can add value to.

 

[Peterw]

Wylie, from my observations, there are quite a few buyers out there, with sub $2m to spend, and anything worth while seems to get offers made fairly quickly. It was at least nice of the agent to let you know the situation. Many dont as we both know.

 

[RumpledElf]

Part 2 - If CBA closes that branch, could somebody actually live in the building, or would it have to be a business. I imagine I might need to check zoning or something, but I've always wondered about whether some of these plain jane boxy buildings could be rented as private accommodation if the rental market was so flat that a commercial tenant could not be found at a reasonable rent.

Country towns are full of ex-banks with all manner of businesses in them. I'm most fond of the one in Clare in SA's wine region that has a real estate agency in it

 

[RumpledElf]

You aren't buying this property off the Bank. It clearly says the Vendor is a retired old lady who wishes to move on. She's probably a wealth of knowledge like you are and would like nothing better than to pass ownership onto you....why not try and get a conversation going with her, scoot around the agent.....you never know, you might get on like a house on fire, talk about pumpkin scones or whatever Qld ladies natter about.

For sale: Bank. Only used by a little old lady who used it to pay for her tea and scones habit. Not used at all on Sundays.

 

[Dazz]

Not used at all on Sundays.

...all jokes aside, that is one of the best aspects of office / commercial space.


From 5pm on Friday thru to 8am on Monday, the place is empty....no wear and tear at all....same at night 7 days a week.


Most of my stuff sees about 50 hours of usage per week. The other 118 hours of the week it is vacant. During holiday periods the hours of usage are far less still....it's fantastic.


The opposite can be said for most residential.

 

[Dazz]

I just got this email (6pm) -

This property has had a offer which the seller accepted today subject to various conditions.

Interesting....

I wonder how many people, now knowing this, have slightly changed their opinion that this property, as portrayed by Macca earlier, was something to be fearful and wary of. Even just a slight shift ??

 

[RumpledElf]

The opposite can be said for most residential.

Clearly you don't own any brothels

 

[wylie]

Interesting....

I wonder how many people, now knowing this, have slightly changed their opinion that this property, as portrayed by Macca earlier, was something to be fearful and wary of. Even just a slight shift ??

T33's post made me ponder. Macca's post also made me ponder. Banks seem to close branches with reckless abandon. That wouldn't worry me if I knew I could rent the building to someone else quickly, and for similar rent.

I'm wondering if the agent suddenly had a rush of queries and also wonder if a SS member has bought it

It just seems so cheap for such good rent, but then I am comparing it to residential, and I know it is a different animal.

 

[wylie]

How do you have a loan of $600k if you don't have a property to lend against?

Sorry, I didn't answer this. I must have missed it. The loan is secured by other properties.

 

[kathryn d]

Wylie,
I'm going to play Devil's Advocate here....as I think your laws would be similar to Canada, in this respect.
I am making the assumption, this trust money is from your parents holdings?

Commercial Property may be profitable. Unless you have experience in this area, you may also make a lot of bad decisions. Should the markets conditions and/or decisions work against you, and this leads to a loss of money, or the property being forclosed, would your estranged brother have legal recourse for compensation?

In Canada, a person with Power of Attorney, or Executor of a will has a legal obligation to use due care.Selling a property well below value, or using reckless judgement, could make them liable.

The fact you had never purchased (as far as i have read) Commercial Properties before, wouldn't go in your favor.

 

[wylie]

You are right Kathryn. It is money in the trust that we look after for our father.

We want to make best use of it, and perhaps right now that is to leave it as it is until something comes along, or the world situation settles.

I don't think there is an issue with the estranged brother as his needs are handsomely looked after via a testamentary trust, however the big risk is that we could make bad decisions and lose money that eventually will go to us and our children.

Having said that, I know that courts and judges can and do make decisions in strange and mysterious ways.

 

[Aaron_C]

Sorry, I didn't answer this. I must have missed it. The loan is secured by other properties.

I see. For something like this it's probably not enough to do any property development...I would just leave it in cash for now and just take the time to research commercial properties (as Dazz has suggested) or even residential property since that is something you are already familiar with.

 

[shuggy]

Block of units

Hi Wylie, i reckon this block of units next to the Broadwater on the Gold Coast would be a good buy.. great position returning $72k per annum

Block of 5 units Gold Coast waterside units

This block of 5 units is only 50 metres to the water front park at Labrador, right on the 'Golden Mile'. Consisting of a renovated 3 bedroom split level house plus 2 x 2 bedroom renovated units and 2 x 1 bedroom renovated units, all on one title.

 

[INVSTOR]

Interesting....

I wonder how many people, now knowing this, have slightly changed their opinion that this property, as portrayed by Macca earlier, was something to be fearful and wary of. Even just a slight shift ??

Can feel the shift!! Dazz, have you found in the current market that other capital cities often have better returns with commercial property than Perth? Apart from Lockridge I find resi returns in Perth to be very low, wondering if it the same with commercial properties currently.

 

[INVSTOR]

I had to work today, but just got this email (6pm) -

This property has had a offer which the seller accepted today subject to various conditions. If there are any issues which makes it available again I will let you know.

So, for now, this is under offer. I wonder if someone from SS has made an offer. If so, I'd love to know more when there is some certainty.

Thanks for all the help and advice.

I think I will keep looking for something commercial or an IP bargain that we can add value to.

Hi Wylie, I can forward you the Executive Summary of the commercial property I was considering if you just want to get a feel for it. Let me know if interested.

 

[Dazz]

Last time I did any serious research was 18 months ago....I haven't looked recently so I'm not in a position to say Invstor.