Hi Everybody,
I have another general question(s).
I am looking into a warehouse in zone 2, tenanted at $60000gross + GST. 5+5 year lease (expiry 2014).
Asking price is 300K
Here are my questions:
$60000 gross means I have to pay tax on it, right? What & how GST is involved on it?
Is this figure including outgoing fee?In general term, what are ongoing fees as a landlord of this type of property?
As you can see I am only mega beginner.
Thank you.
MJIn order to collect gst (and pass it on) you must have an abn & be registered for gst – see your accountant for details.
If the lease is $60k + gst , you will invoice $5k pcm + $500 gst – $5,500 pcm, provided you are registered for gst. If you aren't registered you can only charge $60k but have to wear the gst which you have paid on the inputs (eg property maintenance, agency fees etc)
A gross rent includes the outgoings (ie you can't bill extra for the outgoings, only for water consumption or whatever is listed).
Outgoings will include: agent fees, land tax, rates, water/sewer service, insurance, maintenance, Essential Services certification etc.
Gross return is 20% – interesting…..Is it a dilapidated building? In need of major repairs? Roof leaks? Compliance issues? Functional obsolescence? Asbestos?
What are the rent reviews? How often?
How long to go on the current lease?
When is the option due to be exercised?
What security is being provided by the tenant? Bank guarantee/bond?
If the tenant leaves, how long will it take to get a new tenant? What is the vacancy rate in the area?
Thanks Scott,
Actually, it is a new building. Rent is on 5+5 year lease (expiry 2014).
I am not sure what is the catch but I have to visit it myself to see.MJ
one other thing: high return = high risk
What is the quality of the tenant? Is the property out in the sticks? Are there any good comparable sales/lease deals to work from?
You will need the lease to know all the ins & outs including incentives.
Thanks again Scott,
This is located not too far from CBD as well.
In general, how much yield you will consider as "good" for this type of property?
Send me a pm with a few more details so I can have a look at it for you.
MJP, you seem to be a few steps ahead of me. I am too engrossed with residential but after looking at your projections, I am starting to think commercial rental property may be what I may have subconsciously considered to invest in. Could you or anyone give me directions?
MJP, what was the outcome of this?
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