CIP due diligence checklist

Hi guys,

Looking to purchase my first CIP later this year.

Budget is approx $500-650k, looking for net yield of hopefully around 6.5-8% so regional is probably my best shot.

I have been looking at a number of different listings but don't necessarily know what I should and shouldn't be looking for.

I was hoping some more experienced investors had a commercial property due diligence checklist they run through when assessing the attractiveness of a property. At this point in time, I'm just scoping out the net yield, the length of the lease in place, and the general area of the property. I would really appreciate any advice with what to look for and potential red flags etc.

Cheers.

 

Due diligence, scope depends upon the property.

• Strata minutes
• Development Approvals and consents (tenant consents, usage)
• Zoning compliance
• Leases
• Security (bond/personal guarantees, first born etc)
• Weighted Average Lease Expiry ie risk profile
• Rental market analysis (commerciality of rent & incentives which are in the lease)
• Vacancy rate
• Building services (plant and equipment reports eg. Lifts, fire services, hydraulics, electrical supply, air conditioning, telephony/fibre connectivity, cranes/hoists)
• BCA compliance/building reports/structural survey
• Degree of obsolescence eg small floor plates, low roof height for storage, column spacing, roller shutter/shopfront
• Competing premises both constructed, under construction or approved/planned
• Independent valuation

Some of the above requires legwork or consultants.

Before some information is provided you may need a confidentiality agreement however the IB will generally provide a brief summary of the financials. You will need to request the leases to substantiate the details.

I'd engage with a broker like @Corey Batt sooner rather than later to confirm availability of finance.