General Commercial Property Queries

You would have to bear the cost of reissuing the bank guarantee if you have requested a change (but not if it was issued incorrectly).

If the change is due to you buying a new leased property, then the vendor should be footing the cost.

 

Yes it was due to a change of ownership and was under the old owners. Thank you for your help.

 

Hopefully you haven't settled yet or are still holding a few dollars on the vendor otherwise the solicitor hasn't done their job to ensure all documentation has been transferred (this is the same as a bond not being adjusted at settlement).

 

I was told "Tell them to refer to special condition 2 of the lease, tenant should pay any costs re the lease for their use." and "That clause doesn’t specifically say for bank guarantee but it says for all reasonable expenses etc so that should cover it no prob."

 

Yeah but nah! Provision of the bank guarantee is not determined by the "permitted use", if only people could draft a clause which you couldn't sail the Titanic through.

Your solicitor should have enforced the procurement of the replacement bond from the vendor. Now you have zero security (well almost, the vendor could still claim on the bank guarantee as it's in their name).

 

With the way things are, I prefer to just pay the $250 as it's a small price to have the guarantee. Will see this as a learning experience to action this amendment prior to settlement.

 

I have found "With Rethink Investing, hosts Phil Tarrant and Scott O’Neill" podcasts quite useful for introducing investors to commercial properties.

 

I'm curious to know if any experienced commercial investors are still investing in residential properties? Or have you guys fully transitioned to CIP because you have your base residential properties and the commercials are a nice way to balance everything out .

 

Update about this. Even though l said l'll pay for it, the fellow made a song and dance about it on an email. I actually called my managing agent to see if she was ok because l thought he had a go at her on the phone. I guess this highlights why self management is not so great and maybe this is a generalisation but some builders are really rough around the edges ha ha.

 

Keeping only few (dozen) residential properties.
The real income is from commercial.

 

Great stuff and appreciate you sharing your knowledge. After my granny flats are done, l want to purchase a freestanding CIP.

 

just musing here, but we're all aware of the rule of thumb that resi cash flows are pretty poor but is balanced out by better CG than commercial. has anyone considered that perhaps commercial properties in AAA grade locations that have small cap rates, but still positive cash returns, can behave like resi and 'residential type' CG?

I'm in Cremorne (VIC) today and this inner city pocket is seeing quite a bit of development and properties are being sold for record breaking prices. could this area and similar areas achieve CG similar to the traditional resi market whilst still yielding small to moderate positive cash flows? could this be a new commercial investment paradigm?

 

You can but the cost today to build and land purchase cost so so high .
It has pushed up the value of second hand warehouses.
Rents of course have rocketed.
Over the last two years my yard and warehouse rental have increased fifty percent.

 

Gotta agree with you @Beano
Chatting with an agent the other day, huge scarcity factor pushing old warehouses past $150/m² & high clearance topping out around $200/m² for south-west Sydney. Innerwest is over $300/m² even for low clearance buildings.

 

what if the highest and best use of areas is no longer for warehouse space? the cremorne developments i sighted yesterday all appeared to be office spaces going up quite a few levels. I'm only familiar with the Vic market but other areas that come to mind are fitzroy, collingwood and maybe even parts of port melbourne. the change of highest and best use probably isn't new it's just been accelarated.

i think those middle ring areas like cheltenham, moorabbin etc could definitely follow the theory you presented though.

 

Yesterday I emailed my WA property manager my notice of termination to terminate our managing agent agreement. The first time I had to ever do this tbh.

I was factual about the situation and outlined a number of reasons why we were unhappy with the current management of the property. I hope they will acknowledge the request and it is a smooth transition process.

 

interesting theory but i still believe we are all creatures of habit and we will continue to gravitate to and conglomerate in more central areas. I worked on a good sized office project in the clayton area that handed over towards the back end of 2020 and the estate had space for another 3 similar sized office buildings. the first one we completed couldn't fill the remaining space (30-40% GFA) and only the anchor tenant was in place. this was during peak covid so obviously noone was interested in office space at that time but even since i haven't heard whispers of a sniff at the remaining space. just my experience and observation though. I just saw another block in cremorne has been sold by JLL and another ~1000sqm put up for sale. it all says to me proximity to the centre of town is still as desirable as ever.

 

what specifically was the managing agent doing or not doing that made you pull the plug?