Hi All,
We’ll I’ve just about to invest in my first commercial property – 2 shops and 2 X 1 bedroom units on top
But need some comments on:
1) what is the expected (norm) return of commercial property – what if I said it was 7.5% nett pa?
2) is it true that in order to reduce your interest rate you need minimum 30% deposit on commercial property
3) any additional tax savings or deductions allowed on commercial property?It would be great if anyone else out there has a commercial property that they share any experiences and resources.
If anyone is willing, I would be much much much greatful if I could email a few exisiting commerical investors to discuss things.
Ta, Scout!
Hi
I would like to know the answers to the above questions as i’m just starting to learn about commercial property and also can you get a loan for a commercial property for more than 10 years
Thanks Rob
Hi Scout
We do own commercial property but do not profess to know everything about it.
1. Yield – there is no “norm”. The rate of return will almost always reflect the risk involved. For example a building with McDonalds in a premium location could yield only 6% because investors are prepared to pay more for the security of a tenant like that. On the other hand a building in a small town with an unproven business as a tenant may command 15%.
Typically a tenant will pay most or all outgoings.2. Typically a deposit of 30% is required for commercial investment, sometimes more depending on the quality of the lease etc. The interest will usually be higher.
3. Depreciation allowances can be high in some new commercial buidings although in our case buildings have always been old so have only claimed on fixtures and fittings.
It pays to check the age of the property and have a Quantity Surveyor prepare a depreciation schedule for you.Regards
Clive
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