Alexandria warehouse sells $1 million over reserve at auction

Young investor doubles his money in two years

Geebus. That's a nice gain over 2 years.
$1.45mil to $3mill.
The buyer had no idea the reserve was set at $2mil.
Can't help but think they're a clueless cashed up buyer caught up with the euphoria.

 

cashed up, yes, not sure about clueless though... that's an expensive home...

The Erskineville buyer plans to leave the tenant, Sydney Tap and Bathroomware, who had also bid on the property, in place for the time being. She may develop it in the future, she said, or make it her home.​

 

Are there a severe shortage of warehouses in Alexandria?

 

No surprise result - 2:1 fsr, freestanding development site.

 

Pretty interesting on the face of it. It was sold by a developer that was hoping for $2.2M.
All developers bidding had dropped out by $2.3M. Even the existing business leasing the premise lost out.

Then someone paid $3.01M, with no real idea what they want to do with the property.

The seller looks to have bought it vacant possesion in Apr 2014 (Sold $1,450,000 in Apr 2014),
prior to that (Sold $1,260,000 in Mar 2013(Auction))

Seems like a reasonable building envelope?

If you could do a combined development with the premises next door it could make a very substantial and worthwhile development.

Ashmore Estate is planned for the other side of Mitchell Rd. Plans have been submitted in regards to the buildings abbutting Mitchel Rd.
City of Sydney - Online Business

 

That, my PC friends, is how to make money in property!!

 

What does the "reserve price" at an auction mean anyway?

Is it a sworn bank valuation, done by a registered valuer? No (although it could be)
Is it the market worth of the property as calculated by the selling agent? No (although it could be)
Is it set or influenced by buyer feed-back during the auction campaign? No (although it could be)

The reserve price is set by the vendor, as being the lowest price they would be happy to accept on auction day. So it is (or can be) an emotional number that the vendor thinks their property is worth, or what they "need to sell for" to move onto their next purchase....and experience tells me that it is often too high but sometimes too low. IMO, no value should ever be placed on a "reserve price" as it is arrived at by the (potentially) least qualified party in the entire transaction.

 

Not knowing the current lease but the previous buyer bought it Vacant Position in 2014. This one has bought it as a going concern.
Therefore the Sydney Tap and Bathroomware tennant has been there <2 years. You'd think they would have negotiated atleast a 3by3 lease? (Maybe not?) In any event its not really her choice then whether they stay or go while they have a current lease (they would want to be handsomely compensated).