Should I use a buyers agent?

Hi everyone

I have 5 residential atm and am looking to buy a commercial.

Should I engage a buyers agent?

Is a building inspection report as good as being physically there to inspect the premises?

Can the solicitor take care of due diligence?

 

I heard a stat the other day that only 1 in a 100 commercial properties is worth the effort, not sure how they determined this stat, however, the key is to find one and if a BA can help you do this it will be worth every cent, even better if it's without one.

If the BI is experienced in commercial inspections then that will be the best option unless you are experienced in this area of expertise best to engage a professional.

What do you mean by due diligence?

 

Was that due to a poor BA recommendation or your lack of understanding of the investment or other side deals associated with the investment?

 

Commercial is a different beast.
As @geoffw has highlighted, a bad purchase can nake or break your goals and hold you back by 3 to 10 years.

Please use a tried and trusted agent or someone who knows what they are doing.

Alternatively, educate yourself and buy.

Regards

 

A BA having a bad day? Insufficient research by the BA? Lack of comparable stock/deals?

The number of times that I have spent time in small towns to get a feel for the place, using local knowledge for good/bad parts of town, walking the streets, sitting in 'coffee shops' listening to the conversations, chatting to a couple of agents and the locals (OK I was in a position to get to a few business operators in the places that I needed to visit).

Even going around local CBDs, it's fairly easy to get a feel for what's happening (or not).

 

Commercial property is all about the tenant lease and their stability as well as their replacement prospects. In some locations replacement tenants may be easy and in others it can be a nightmare. Some properties can also be a revolving door of failure and low rents or a short term rent that stops. These properties may even have no substantial bond. Some then fall for the trap of a bad risk eg a first time small cafe start up that then also dies and leaves you with refit issues etc.

Remember a BA doesnt sign a purchase contract. The buyer does and takes all risk. Caveat emptor ! If the best BA deal smells bad then walk on. Commercial agents are a different beast to resi agents.

 

No risk assessment? Risk IS the trade-off for high return.

 

Buyers agents might be ok for resi, but i can not support it for commercial. With apologies Geoff.

From my observations, the most successful commercial property investors have an intimate understanding of business operations, of the needs and wants of business owners and the clients/customers they depend on. These type of investors seem better at assessing tenant risk, understand risk of losing income. Using a commercial a buyers agent, that's not delegating risk, that's abdicating risk.

Want to get into commercial, but time-poor and cash-rich? Buy some Goodman shares on the ASX instead.

Maybe SP will come to the defence of buyers agents?

 

I can’t help but notice a big upswing of interest in smaller commercial property purchases coming from resi investors, I think it’s driven by untenable resi yields and increased availability of information, in particular a certain podcast series that leads listeners to post here constantly about commercial buyers agents… Problem is, like Seagulls at the beach there aren’t enough chips (fair value + acceptable quality) to go around.

Personally market seems very frothy everywhere but particularly at the sub $2m price and I think now is a time to think about learning and planning rather than embracing FOMO and rushing in.

 

Someone has forgotten the important factors affecting this (& other) segments. These include - Risk: WFH has impacted demand, there's less competition when it comes to the >$5m market and again above $10m & $20m, most blue chip tenants don't locate in <$2m premises (need larger premises) ie you're dealing with smaller companies/mums & dads/sole traders.

 

Hi Scott, are you talking about specific states and type of properties?

Vic stamp duty has gone up by 1% for price tag of $2m and above. Not sure if that may have been
one of the drivers pushing things up towards the $2m level, which otherwise wouldn't have been
the case before the new duty hike.

Anyway, recall some expert telling me few years back that the sweet spot with less competition
but not big enough to be of interest to large institution buyers used to be around $2m-$3m range
and from memory that's for Melb again. Wonder if that price range has now moved to the $5m just
like your comment above? Cheers!

 

It has moved $5-10m is still mum & dad territory, $10-30m is easily achievable for syndicates. Institutional grade is getting bigger again.

Small properties present too much risk for institutional investors (property trusts, super funds etc).

 

Hi to all the experts.

I have moved recently to Australia (just over an year) and i have now saved a bit for a downpayment for a entry level commercial investment property.

Can you guys please suggest a commercial buyer agent who knows what he/she is doing and who you have used in the past?