Commercial Warehouse - is this decent?

So a long story cut short, I've been asked by my sister and brother in law to invest in a warehouse place with them (with us going 60% and them 40% in a trust structure). What do you think?

Details:

Land Size: 830m2
Warehouse Size: 660m2 (Office is about 110m2 but detachable within building).
Location: It's a smaller street off a main artillery but not too deep within the street, it's number 3 so pretty much off a large artillery. It is about a 2 minute drive to I'm not sure what you'd call it...a semi type shopping complex? It has a Coles and lilttle array of shops but also a fast food type area of 5-10 shops about a 3 min drive from it. The town centre though is roughly a 6-7 minute drive away.
Tenanted: 58K pa. with 5% pa increases circa 61k in Jan 20. Tenant have completed their first option of 3 years (lease was 3x5x5) and have taken up/completed 8 months of the 5 year option. Tenants runs a plumbing and kitchen/bathroom renovations type business and is established (established for 10 years).
Asking Price: 970K.
Building: It's a BV but renovated place - new paintwork at front and concrete parking is in decent shape.
Return is about 6% from my rough calcs.

Doing my due diligence but it seems like on paper it sits well with me with my goal of having a decent passive income. I can't however work out why the vendor is trying to sell or if there is anything I've missed that is more sinister?

Thanks

 

What are the outgoings? Have you confirmed them?

What is the condition of the building? Eg roof leaks, box gutter, skylights, roof sheeting, asbestos, switchboard, compliance issues etc?

Has the new lease been executed? Have you reviewed the lease?

Is the vendor a related party to the tenant?

Security - bond or bank guarantee needs to be topped up and transferred.

What is the vacancy rate in the area?

 

Usual risks about investing with family?

 

Not confirmed outgoings, but I thought that was the tenant's who pay them?

Building looks early 80s single brick. Roof is newish with no leaks visible by the naked eye and we did visit the site on a relatively rainy day. No asbestos. I don't know if the electricals need rewiring.

New lease (option) has been executed, 8 months into the new term.

Vendor is not a related party to tenant.

Driving around and doing the good new method of online searches not a hell of a lot of vacancies at the moment.

 

6.2% on that isn’t really attractive
It is just a vanilla buy and hold
If just a stand-alone strata, It would need to be7.5-8%

Don’t forget to factor in
- vacancy costs
- refurb costs
- What is the replacement value of the building

Commercial is really only quality assets in the $5-7M space.

If you don’t have a $1.5M deposit, it often Beter to syndicate or grow your wealth first with resi/developing

 

Thanks for all the replies.

To be honest, I don't really expect high yields or have high expectations. I was happy at 5.5%

Vacancy costs: Call me bullish on it, but I don't reckon it would be too difficult to rent it out if the current tenant for some reason is booted out or can't pay up.
Building: Looks solid, no sign of asbestos.
Replacement Value: No idea.

 

Is there a method in finding out the vacancy rate in an area? Having trouble with finding sold prices too. Not as easy as resi!

 

In NSW you can use the six maps plug-in for Google Earth, some other states have an equivalent tool for sold prices.

Vacancy rates are much more difficult get out and do a drive by. That'd give you some idea on how many properties are vacant.