Went to a mortgage broker recently with 2 potential property purchases in mind that required finance (1 commercial, 1 residential – both priced within $10,000 of each other). I can sum up my experience as follows:
Commercial property – >7.5% rental return, secured rental of >2yrs with >3yrs attaching option, long term tenant which rents other offices in the same building and has expanded into my potential office purchase.
Residential property – <5% rental return with tenancy ending in 6 months with no guarantee of whether the tenant will sign for a further 12 months.
Adding salt to injury – as landlord I pay rates on the residential but the tenant pays them on the commercial. In effect this increases the effective rental yield on the commercial up 0.05% and decreases the residential down 0.05%.
Would you believe the broker through money at me for the residential investment but wouldnt touch the commercial property.
What is going on?
Try another broker.
Generally you’ll find you will always get a tenant for a residential property but there is more insecurity with commercial. Financial institutions are just assessing the risk.
One commerical deal I did I had to get money from a Solicitor’s nominee fund and Mobil Oil was the tenant for about another 8 years. If the deal is good someone will back it.
Cheers
JeffHi divcor
I recommend you speak to the following broker:
Roslyn Hackett
Topline Finance
email: [email protected]
mobile 0414 596 453She’s never let a deal fall over for us.
Let me know how you go.
Goode1
Goode1
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