Has anybody invest in Commercial Property and bought one? Is the 11 ss also applicable to Commercial Properties?
I have seen some Commercial Property which easily accounts for the 11 second solution. Another great aspect to Commercial Property, as Steve describes in his book, is that the outgoings are frequently paid for by the tenant.[
]Unfortunately, I’m still too poor in absolute terms to afford the deposit. Most of the truly lucrative deals (i.e. 30%+ CoCR) I have seen have been in the low $1-million range. [
]Good luck though…….
Hi Bandit,
thanks for your respond. Here are the datas, mind to give me your opinion?
Sale Price (excl. GST) : $225,000.-
Annual rental (excl. GST): $ 18,270.-
Actual return : 8%
Outgoings paid by tenant
Lease end date : 31-1-04
Lease term : 4.5 yrs
Options : 5
Rent review and Frequency: 3%Applying 11 ss rule:
Weekly rent : $18,270/52 = $351.35
Purchase price : $351.35×1000= $351,350.-
(well above the sale
price isn’t it?)
Pittfalls??
Is it a good investment?
Somebody like to comment?Don’t forget to divide the weekly rental in half before multiplying by 1000.
As such, weekly rent = $351.35
Divide by 2 = $175.68
Purch price approx $175,680.>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Applying 11 ss rule:
Weekly rent : $18,270/52 = $351.35
Purchase price : $351.35×1000= $351,350.-
(well above the sale
price isn’t it?)
Pittfalls??
Is it a good investment?One BIG error in your calculations. [
]
You have to divide the weekly rent by 2 prior to multiplying by 1000.Therefore.
$351 per week / 2 = $175
$175 x 1000 = $175,000Doesn’t actually fit 11 second solution. [
] But don’t automatically write it off. Look at other options. Also remember, that the calculations are on the price the vendor wants to see for – you might be able to decrease the sale price….[]Keep on trying…. that’s what I’m doing.
Thanks Monster,
I forgot that!!![]
Not a good one though………[]Hey Monster, you just beat me to the punch. My screen flickered while I was typing and I thought someone must have gotten in before me…[8D]
Yes, just registered & began a search for “commercial property” & found the thread.
Now, I’ve got work on getting my 3 houses to be
cashflow (+)ve (only one of them is at the moment),
so I’ll keep plugging away.
[]Thanks Gents,
I made a BIG calculation error!
How much above the 11ss rule would you go?You really have to do the sums on each individual case. As long as it’s cashflow positive it’s OK by me.
Make sure you take into account any possible fluctuation in your outgoings. Remember, the tenant won’t pay extra rent, but the electrics might break, the lease ends, interest rates rise etc.
So long as you’ve got a built-in safety factor I’d be happy to go a little above the 11 sec solution.
I’ll remember that Bandit.
To make a prop. from neg. to pos. we have to make additional payments. This is not tax deductable or? As far as I know only the interest is tax deduc.
Any other solutions?
Sorry for so many questions from a beginner.Hi
re the options to turn the -ve to +ve cashflow.
don’t forget that the building and fixtures have various depreciation rates and a good and knowledgeable accountant and quantity surveyor can turn your -ve tp +ve depending on your tax position.
rgds
CobraHello Prop16 I would imagine the rule does not apply as comm rates are about 2% higher than standard rates. You would have nothing left over for repairs,improvments,vacancies,int rate in creases,ect bye andy
]
]
]
]
The topic ‘11 ss also applicable to Commercial Property?’ is closed to new replies.
