Hi all,
I’m looking into an investment which is a office in a complex. The yield looks quite good (10%) but the outgoings are for the owner not the tenant which starts to make it very marginal in terms of +ve cashflow. I have a copy of the lease and it appears that the owner is also responsible for common areas so potential for some unexpected costs to come up.
I live overseas after many years in Perth so can’t go and do the looking myself to judge if these are likely to come up.
I wanted to know if others have experience in office investments.
First post so still learning the ropes!
Hi Thomas
welcome to the forum.
without looking at the numbers, it sounds like you have a negative cashflow property.Cashflow positive is when there is money left over after all expenses are deducted. Do you have a sofware program to analyse your property deals. I use REAP by Dolf DeRoos. Steve McKnight alsa has a property calculater although personally Im not very fond of that one.
You also need to take into consideration the loan. With commercial, its usually 70% LVR which means you may be putting in more of your own money.
If you put up some numbers ie purchase price, management costs, strata fees etc, we (I or someone else) may be able to show you how much money you are losing on the deal!
We buy properties in all conditions. Can offer Immediate Cash Settlements, No Real Estate Agents Required
[email protected]
phone 0412 437 582Hi Dr X,
Property would be 95k, with rent of 777 per month (9324 pa). Management of 7% (632 pa) and fees of 2823 pa (strata, water, council).
I have had a look at the calculator by jaffasoft and it was marginal. Property in WA for stamp duty.
Also my bank manager told me they won’t use residential equity for a commercial deal, which means I would have to come up with more of my own money.
Thanks.
Thomas,
If the lease stipulates the Lessor has to pay all o/g’s, I’d move on to the next one.
In comparison, saw another similar cheapy in WA about 6 months ago, it had an asking price of 115K, with the tenant on a 5 yr lease, paying $ 200 p.w. escalating at 4% p.a. and the Lessee paid all outgoings. The o/g’s will kill the deal for you every time if the Lessor has to pay them, especially on these little cheapies.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
You must be logged in to reply to this topic. If you don't have an account, you can register here.
