How does this look for investment?

Discussion in 'Commercial Property' started by Lifestyle, 18th Sep, 2017.

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  1. Lifestyle

    Lifestyle Member

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  2. Archaon

    Archaon Well-Known Member

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    10% sounds good, doesn't seem sustainable though.

    That's $291 A month to the owner on a 7sqm storage locker.

    I'm currently hiring a storage locker that is 3x4.5 or 13.5sqm for 180p/mth in Newcastle.
     
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  3. Shady

    Shady Well-Known Member

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    10% net return!! Why aren't they keeping it for themselves?

    Sounds too good to be true...you know what to do.
     
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  4. Scott No Mates

    Scott No Mates Well-Known Member

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    Apart from guessing which direction and how fast....


    @Lifestyle - have you made your own inquiries as to the commercial rates for storage space in the district?

    It wouldn't be the first time that an owner has inflated the value due to a high rent.

    Are the spaces strata titled or otherwise subdivided? Will you be paying outgoings on these (rates - minimum charge, land tax, water, strata levies, insurance etc).

    How difficult is it to set up another vacant warehouse with the same facilities?
     
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  5. Scott No Mates

    Scott No Mates Well-Known Member

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    5 minute dude ill in gents

    - Simply Self Storage - $200/month for 7.2 m³
    - This offer is a doubling of a 3 year rent guarantee of 5%, ie not a real rate of return.
     
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  6. Archaon

    Archaon Well-Known Member

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    5% net?
    Not a bad RoR I guess, better than property yielding 5% gross.
    Though securing finance might be an issue, and the sustainabilty/risk of the business model might outweigh the return.
     
  7. Lifestyle

    Lifestyle Member

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    Thanks for the input. I was definitely sceptical based on the headline and claims. After further research (cheers Scott) it seems like much a do about nothing special.
     
  8. Scott No Mates

    Scott No Mates Well-Known Member

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    This is a developer's rental guarantee of 5% for 3 years, not a real rate of return. After 3 years, you'll see the real RoR.
     
  9. Archaon

    Archaon Well-Known Member

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    The developers rental guarantee for the first 3 years is 10%.

    It sounded as though you said the rental return reverts to 5% after the initial 3 years
     
  10. Scott No Mates

    Scott No Mates Well-Known Member

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    @Archaon - developer has doubled the yield according to the blurb, it was 5% & there's no-one desperate enough to bite, throw a little more burley into the water.
     
  11. Archaon

    Archaon Well-Known Member

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    I couldn't see anything that mentioned 5% originally.

    No idea what the rear RoR will be then.
     
  12. Property person

    Property person Well-Known Member

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    the developer is selling these to you for $9k over market (at least) then giving you your money back over three years....... clever or dodgy? you decide....
     
  13. Beano

    Beano Well-Known Member

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    I have lots of these types of units
    Currently ripping them out as I get a better return leasing the whole area as a warehouse !
    Too hard to lease , too much work too many abandoned units filled with rubbish