Commercial Property Yield

Hi Y-man,
I am guessing your reply is to my last post
Current lease expires in 2021 but haven't got full details of which month.

Thanks,
FXD

 

Being an ASX listed company is not always a good thing.
Ask anyone who has had shares in a company that has folded !
Ensure there are personal guarantees from various directors and the assets owned by that person to back up any guarantee.......
Wait for all the info before signing (or ensure it is a condition in any agreement)

 

Thanks guys, appreciate the advice.

Cheers,
FXD

 

You're not going to get personal or director's guarantees from a public company or a co-operative - I've tried (a bank guarantee is as good as it gets).

 

Not sure if anyone mentioned this so far, but many commercial buildings are being picked up with the intention of looking at redevelopment. In places like Parramatta, Alexandria, in Sydney 30 year old buildings with 6 floors are sitting alongside towers with 44, and probably soon to have 50+. Good location near station, etc is a huge plus for future growth. Some developers are buying them up now with a view to a long term sit and paying based based on net yields of less than 4%. Commercial is a very mixed bag.

 

This has been happening for a couple of years now across the board but things started cooling off 6 -9 months ago. The big end of town have already doubled their money in the last 2-3 years. Last year developers were all over anything that had the slightest uplift.
These purchases have nothing to do with rental return and everything to do with zoning either current zoning or speculative future zoning.

There's still activity for prime sites but nothing like 18 months ago.

No different from a residential property with development potential.

 

If you look hard enough, you can find +8% yields in Brisbane. Especially in that price range. Personally I wouldn't view an 8% net yield as enough incentive to invest in a Townsville. As already mentioned above, an ASX company doesn't offer the safety net one would assume.

 

Another couple more reported property sales of 10pc net (about 60pc of the net rent is profit)
Bayleys total property issue 2 2019 (March issue)
Borrowing cost approx 4.28pc

 

If you get into commercial properties you will get a big tax bill ...are you willing to pay heaps of tax ?

 

I think in most cases getting a large tax bill is a good thing? Means you are profitable or am i missing something?

 

Unless it's land tax.

 

100,,% Land tax is a very blunt instrument

 

@Beano
Thank you so much for your posts. Constantly learning cheers

 

To avoid land tax buy outside of Australia like NZ

 

Or buy in places where the tenant must pay land tax?

 

Coming soon to you. A great Labor initiative for NZ to keep up with their brothers and sisters in arms here.

New Zealand’s proposed capital gains tax could nudge taxpayers to invest in art instead of property

 

And it is about time too!
I wished they introduced capital gains tax 50yrs ago ...if they did I would own 72 properties as I would have kept every property I brought ...instead I sold when I should not have.
The increase in government taxes is likely to reduce tax from the incredibly high top rate of 33pc to maybe 24pc ...I would ...
1 : never sell
2: pay less income tax

 

"incredibly high top rate of 33pc to maybe 24pc" and here we are soon to pay 49% plus,plus,plus.
I think I need to move to NZ. I am not joking.....They seem to get "it" alot.

Only question is if many take your strategy and never sell then can they raise the necessary money for tax cuts?