Random observation why it's much easier to buy resi property (and resi OTP) over commercial

Here's another idea. Buy a couple of power stations.

Meet the Broken Hill couple who collect old power stations

 

Isn't Hazlewood for sale? Good yields I hear

 

I know nothing about Perth or Mount Lawley but I'd start by asking for the IM. Not sure about the high risk but the yield doesn't seem all that great for what I assume is a strata suite

 

Interesting. However whatever the investment is, it needs to provide cashflow.

 

Was not a serious suggestion lol

 

@Gockie if you're looking for yield, USA has massive opportunities. That's where I would go now for yield . 10% plus net yields are possible.

 

Everything is up for consideration in commercial... even buildings that house funeral parlors and brothels.

 

most of the rent increase within the lease are 3-5% per year. this would be good if it increase that rate the life you held the property. experience as a lessee says this rarely happens
the above property start off an 52k income, at the end of lease it will be 72k.. I am forecasting that this will reset back to 62k when next lease renewal regardless the same tenant or not.

 

@RetireRich101 so it's pretty close to a 5% return for spending a million. I don't get it. I can get those yields on resi.

 

I was thinking about this again and perhaps the reason for the higher cost is the full commercial kitchen fitout that would run with the property, not with the lease? At least the purchaser would have depreciation?

Still seems like a low return to me. Could it be overpriced?

 

That's correct but you need the right product and the right market because prices have soared since 2011. There was a time we were buying at over 20%, they are long gone.

We just purchased a multi unit property (quad) at around 14% pa, these are in high demand due to the cash flow so you are competing with just about everyone in the world. SFH (Single Family Homes), the yields may be 8%?? dependent on how well you buy and market.

 

I would have thought the kitchen is a potential liability. costs a fortune to have these removed at the end of the lease and a potential new tenant would probably want new/update/different equipment...or none at all.
I'm selling property at under 5% yields at the moment and some under 4% but this is North Sydney/St Leonards but if you did a search for property under $1mil in those areas you'd probably only have 4 or 5 properties available. There's nothing around. It may or may not be the same in Perth.

 

Tenants tend to have the responsibility to fit out the premises themselves, and you can put in a "make good" clause for when they leave.

 

Perth isn't too bad. There are a couple of properties around at 7% to 10% net and under a mill. That's why I am trying to understand why this property is so much. Doesn't make sense.

 

Any rookie observations about why Veggie Mama is so expensive for the yield? I would like to understand more about commercial too.

 

Perhaps the vendor is dreaming?

pinkboy

 

Good point. I will watch and see. I have been looking at commercial for about 2 weeks so very much an ignorant novice.

 

Call me a 2 week novice too....

 

It may be that's the market. When you're lucky to ear 2% from the banks 5% seems like a great place to park your funds.
I'm selling freehold buildings at under 4% yields buts thats the market and I cant get enough of them.

 

Don't know. That is why I am asking the question. Veggie Mama for $1 mill is offering ~5% return.

Here is a 425sqm Office Suite offering 7.9% net ROI ($75,000pa net income) asking $950k. 5 year lease plus options. 11/15 Bonner Drive, Malaga, WA 6090 - Offices for Sale #501587701 - realcommercial.com.au

669sqm Leased Investment returning 7% with 5% annual increases asking $950k. Leased to 2019 with a 5 year option. 7a Goongarrie Street, Bayswater, WA 6053 - Industrial/Warehouse for Sale #501926190 - realcommercial.com.au

246sqm returning $33,282 plus outgoings. 6.8% P.A. net ROI. Asking $490k Unit 3/37 The Broadway, Ellenbrook, WA 6069 - Industrial/Warehouse for Sale #502158094 - realcommercial.com.au

The ROI is better for each of these properties but I would not know if any are better or worse deals than the Veggie Mama property. Is this where you start looking into the financials of the company behind the lease?