Hi everyone
I am considering purchase of a commercial property (retail) but don’t know how to determine if the purchase price is realistic or not. Does anyone out there know of a formula to calculate a fair purchase price.
Any assistance would be appreciated.
regards
Dave
I don’t know much about commercial property, but I do know that the price of it is usually related to how much rental you can recieve (ie, generally the higher the rental, the higher the price of the property).
I would look at the gross rental return and see what ballpark figure you want to pay.
Rent per annum X 100 = Gross rental return as a %
Purchase PriceDepending on whether you want income (which I presume you will) or CGain, you can see what sort of purchase price would help you get the return you need to get in order to cover your costs and make it worthwhile for you.
This can then give you the confidence to put in an offer, especially if it is below the asking price.
I hope this helps.
Kelly
HI Dave
I have just been to a seminar that property investing ran with Martin Ayles.
The basic theme with commercial property is that the rent is everything.
-When it comes to lending off banks the better the tenant (eg. mc donalds v’s a fish n chip shop) the easier it is to get financetheir advice was get a tenant before you go to far down the track of buying
hope this helps
Nick
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