Why wouldn't you go for commercial?

[Sunfish]

There is a bank around the corner from me for sale with nett return of $621k/a (approx). It has .46 hectares of prime land and a modern building with plenty of parking.

I think we would all agree that if you owned that then you would not need to consider any fancy LOE financial arrangements.

But it is only $7.1 mill to buy. Only? Well how much resi property would you need to own to generate that return? I reckon 40, maybe, but that will vary widely according to your own preconceptions. How much would that many properties cost to buy? Maybe $20 mill. That's three times the price of this property. That's a compelling difference, in my mind.

http://www.cbre.com.au/EN/Property+Listings/Commercial

 

[Pushka]

One thing I would consider is the commercial tenants going bust! You could have the Directors sign as personal guarantors, but this still might not be enough. I think maybe the next 12 months could see a lot of that happening. But of course, if you were able to attract a Government lease, that would be excellent.

 

[Sunfish]

One thing I would consider is the commercial tenants going bust! You could have the Directors sign as personal guarantors, but this still might not be enough. I think maybe the next 12 months could see a lot of that happening. But of course, if you were able to attract a Government lease, that would be excellent.

• 5 Tenants including NAB, Commonwealth of Australia and State Government;

 

[Pushka]

• 5 Tenants including NAB, Commonwealth of Australia and State Government;

Hmmm, sweet!

 

[Ausprop]

agree completely. resi makes no sense, tho if you have a bunch of it already and it's financed up and ticking along and has some cap gains in it, then it's a line ball decision whether to endure it or dump it

 

[j_p]

Because the bank said no to my $7.1m loan application

 

[Ridin-High]

There is a bank around the corner from me for sale with nett return of $621k/a (approx). It has .46 hectares of prime land and a modern building with plenty of parking.

I think we would all agree that if you owned that then you would not need to consider any fancy LOE financial arrangements.

But it is only $7.1 mill to buy. Only? Well how much resi property would you need to own to generate that return? I reckon 40, maybe, but that will vary widely according to your own preconceptions. How much would that many properties cost to buy? Maybe $20 mill. That's three times the price of this property. That's a compelling difference, in my mind.

http://www.cbre.com.au/EN/Property+Listings/Commercial

You got 3million for the deposit sunfish?

I think it would take awhile to save that up, hence using resi IP to build equity fast to get into this stuff

 

[RumpledElf]

http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=105576375

Buy a cheaper bank then

 

[HiEquity]

Well the size is a bit of a problem for this little black duck to slip straight into the portfolio! Anyone want to go half? Or even better thirds?

Would have to see those leases though - govt tenants may be great for security but it all depends on what the incumbent L/L signed up for in the leases. The Commonwealth for example seems to have a way of trading on their security as a tenant to ensure their leases put relatively few obligations on themselves if they can get away with it. I'm told they don't always get away with it, depending on the market at the time and the intestinal fortitude of the L/L...

Every case is different though and is worthy of further investigation... it would make a great case study and learning for everyone if we could go through the leases in some detail on here but I suspect the agent/vendor may have a problem with that! Oh well...

 

[HiEquity]

http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=105576375

Buy a cheaper bank then

Hmmm, gross 6.5% yield including a resi tenancy... not quite the same attractiveness!

 

[Sunfish]

You got 3million for the deposit sunfish?

I think it would take awhile to save that up, hence using resi IP to build equity fast to get into this stuff

If I had $2.5 mill tied up in res property (many here claim that, if not what are we all talking about?) I would be happy to switch.

 

[Sunfish]

Well the size is a bit of a problem for this little black duck to slip straight into the portfolio! Anyone want to go half? Or even better thirds?

Now you're talkin HE. A positive attitude. Note: If the same guy who built them still owns them he is a low-life jerk. Don't trust him an inch!

Check the area out via satellite. It really is prime property.

Edit: Drove past it earlier and WilsonHTM is a private tenant and Sensis was (don't know if they still are). And I agree that bank leases are not what they used to be either.

 

[steveadl]

Am I the only one the link didn't work for?

 

[battler]

Am I the only one the link didn't work for?

No good here either.

 

[LynnH]

Nor for me ...

Cheers
LynnH

 

[Sunfish]

Yeah, Sorry bout that, it only gets you to the search page.

Click on Qld then Aitkenvale and it should be the top listing.

 

[Propertunity]

You got 3million for the deposit sunfish?
I think it would take awhile to save that up, hence using resi IP to build equity fast to get into this stuff

I wonder if the vendor would do 40% vendor finance?

Here's the link: http://www.realcommercial.com.au/cg...&s=qld&snf=as&tm=1245126879&cu=fn-realcom_CBR

 

[BayView]

I guess this falls under the heading of "opportunity cost" - what better use can your money be put to.

For me; unless you are worth far more than this one deal, a purchase like this, while a nice return, is probably more risky than owning the equivalent 30 or 40 houses to the same value.

Why? Because you would have most of your wealth tied up in one property, and some of the tenants are Banks. The risk of vacancies is higher in this scenario, and being a comm property, may take a while to get new tenants.

It is no secret that Banks are consolidating and trimming costs these days by sacking staff and closing Branches. This sends off alarm bells in my head, and may be why the property is for sale?

The extra land around it is a bonus for other projects I suppose, but as I said; it would need to be a deal that is only a small portion of your overall wealth, or if you were combining your wealth with that of a few other partners.

It's definitely something I would like to "build up to" though.

 

[steveadl]

I can hear Daz slamming away on his calculator as we speak!

 

[RumpledElf]

Hmmm, gross 6.5% yield including a resi tenancy... not quite the same attractiveness!

The ad is really vague, its hard to tell if the house is tenanted or OO since its selling at the 'value of the house' (for that price it would want to be a VERY nice house). If *both* are rented out then yeah, not so good a deal. If its just the bank, then its not so bad.

Don't you hate vague ads?