Hi
Could someone point me to information regarding the pro’s & cons of investing in small offices (under $100,000). The Rate of Return appears to be at 8 to 9%pa.
Thanks
Bruce
It seems that no one has done this kind of investing. Maybe I should explain in more detail.
The offices are usually rooms inside a building (ie strata titled) and you lease this out to one or two person type businesses. The floor area is between 20 square metres to 60 square metres. The rental returns are 8% or more. The price seems to depend on the demand for office space (location)and quality of the building.
Before I acquire into this type of investment which seems to show positive cashflow, what are the disadvantages of this type of investment? And advantages? One advantage that is obvious is the low price (between $40,000 to $150,000).
Look forward to some response.
Cheers
BruceBruce,
I’ve not bought one before. However, my concerns would relate to the business in there and how easy it is to re-let to another business. Especially if you are talking a big building with loads of floors, when times are tough, why would they choose your office?
Other things would be the lease thats there at the moment, etc.
Are you presently looking at a deal? What is the tenant/lease like? How is the location?
Munjy
Hi Munjy
No deals as yet, just looking at face value from the adverts. There are various offices around Perth CBD and in the suburbs. Locations are usually in or near main white collar type businesses of the town. Some buildings contain 6 office units and can reach up to 40 offices.
I would agree with having one with too many offices in one building as the competition for the tenant can be high. Hence the prices are usually low.
Bruce
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