Questions in buying a retail commercial property in Brisbane

I have to say I might be a successful residential property investor but I am really a new baby in commercial property investment ...

Lots of questions to ask for a retail commercial property in Brisbane:

1. What kind of costs are involved? Land tax, Mgt commission, insurance, and ?

2. With a 10 year lease, what is the typical mgt commission rate?

3. Commercial loan rate I got, 4.48%, interest only... it it really good ? To me it’s even lower than some of my residential loan rates...

Many thanks!

 

oops, no one replied to my thread yet...
Seems I have to keep doing research on my own.

I have forwarded the DD package to my solicitor and hopefully he will give me good feedback.

Anyhow I am determined to go for CIP, since my residential portfolio is around $10m already...

 

@Sydneyeva - all too broad a Query without knowing a little more info.

• Yes all the usual expenses will apply. Recovery is dependent on the lease & what's allowable under the retail leases act
• Management fee won't change sue to length of lease but will be cheaper than residential rates - make sure that you use an agency with a commercial focus (not your local residential agency types).
• Commercial loans will require greater security and valuations (at your cost)

 

Thanks heaps Scott!

I think I will go for a bid anyway ... will update here later

 

That is a decent rate for commercial.

Usual costs as buying a resi IP. Allow a few k for the valuation as well.

 

Thanks so much Colin!

In 2013 i purchased my current Management Right business and went through the whole process.. MR purchasing costs were so high and loan rates are also much higher than a CIP...

a lot for me to learn a head indeed.,,

 

Well, been reading and searching a lot in the past couple of days...

Commercial loan is much easier to get and rate is even lower than some of my Residential loan rates.. I am absolutely at the right direction by shifting to CIP ..

 

Thanks Y-man a lot... the tenant is a successful restaurant in NSW and an existing tenant of the developer according to the agent. I checked Tripadvisor about this restaurant and overall feedback was very good...

My solicitor came back with some vital points on capital works and contribution (close to $600k )to the restaurant outfit... i just sent an email to the agent to clarify whether the developer is bearing these costs... if not i am absolutely pulling out.

 

confirmed with the agent...

Capital works and contributions will be made by the developer instead of the buyer.. a big relief!

 

@Sydneyeva - what are the claw-back provisions on the fitout contributions if the tenant assigns the lease?

Do you have 1st right of refusal on the liquor licence?

What other incentives are being offered to the tenant eg rent free/does that include outgoings?

How big is the bank guarantee (should be at least 6 months on a 10 year lease), are there personal guarantees at well?

How easy will it be to relet the property?

What are the make good requirements?

Is there a redecoration clause (eg repainting & refinishing surfaces every 3 years)?

 

thanks so much for asking these important questions.

I know the bank guarantee is 6 months rent.

the new owner will pay land tax, and give the tenant 3 months free of rent.

for the rest questions, i have to read through the lease agreement... i simply asked my solicitor to go through all the documents. While running my business and looking after my two boys, it's challenging to take on more tasks...

 

So a Sydney restaurant which hasn't operated in Brisbane opening in Brisbane?

 

that's what it sounds like - expanding tenant, new interstate venture.

 

Just make sure the rental is market or you may have to wait a long time for a increase
(When known Valuers adjust actual rentals for inducements)

 

i had a further look at the restaurant and notice it's in a regional suburb of NSW... much closer to Brisbane than to Sydney..

Me myself, accidently looking at the Brisbane CIP as it looks more affordable