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8-10% Return

Discussion in 'Commercial Property' started by cashnow, 2nd Aug, 2015.

  1. cashnow

    cashnow Active Member

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    Do they still exist?
     
  2. OC1

    OC1 Well-Known Member

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    Deer Park, Victoria.
     
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  3. Beelzebub

    Beelzebub Well-Known Member

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    Broken Hill maybe; but I wouldn't recommend the place. You can find 8% in some regionals if you're lucky but 10 is probably asking a bit much.
     
  4. Big Daddy

    Big Daddy Well-Known Member

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    I would say yes
    1)Regional
    2)Low land component (some high rise apartments)
    3)High risk, eg Mining towns or speculative invesments
     
  5. FireDragon

    FireDragon Well-Known Member

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  6. Greyghost

    Greyghost Well-Known Member

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    Of course they do..
    I always work off at least 7.5% yield as a minimum for my clients.
     
  7. D.T.

    D.T. Adelaide Property Manager Business Member

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    metro Adelaide
     
  8. cashnow

    cashnow Active Member

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    Commercial, 2.5-3.0m price range.
     
  9. FireDragon

    FireDragon Well-Known Member

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  10. cashnow

    cashnow Active Member

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    Last edited: 2nd Aug, 2015
  11. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Definitely still exist all over the place - the difficulty is sorting through the filfth to find quality properties with strong tenancies in place.

    I'd say the average places client's are buying are high 7's to low 8's - but certainly are some more riskier properties available towards 10% net.
     
  12. cashnow

    cashnow Active Member

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    What would you consider a high quality tenant/property?
     
  13. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    One on a strong lease which is likely to not go bankrupt during said lease and foreseeable that they would renew.

    ie, a Civic Video on a 1x1x1x1 lease - rubbish
    Supermarket on a 10x10x10 lease - potentially a strong tenant.
     
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  14. Scott No Mates

    Scott No Mates Well-Known Member

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    You're not going to get a strong lease & a strong tenant with a high yield.

    I'd steer clear of anything that involved the outdated technologies like video stores - bound to fall over or walk in the near future due to competition from online sources like netflix etc.

    A strong covenant is always great but not the norm with high yielding properties.
     
  15. cashnow

    cashnow Active Member

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    What tenant/property would you consider bluechip in the commercial world?
     
  16. FireDragon

    FireDragon Well-Known Member

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    I think government tenants, banks and supermarkets (as suggested by Corey) are better tenants but I don't think you can get 8-10% returns for these types of tenants but I don't think you can get 8-10% return for these types of tenants.
     
  17. Chilliblue

    Chilliblue Well-Known Member

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    And adding

    Avoid tenants on multiple options
     
  18. Chilliblue

    Chilliblue Well-Known Member

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    Strong well established multi nationals or government but as stated above, yields may not reflect the tenancy
     
  19. D.T.

    D.T. Adelaide Property Manager Business Member

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    Its a balancing act between tenant quality and yield sometimes. The same can sometimes be seen in residential.
     
  20. Scott No Mates

    Scott No Mates Well-Known Member

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    Unless you have market rent reviews at option or every 3 years. I am not anti-option but having 12-6 months notice is generally sufficient to determine what you want to do (as a lessor) - you can always couple that with a demo clause (when negotiating your lease) or if you have plans to refurbish, they just go on hold (and you don't suffer a loss of rent/vacancy/incentives/leasing costs etc).