What it not be nice if all tenants paid 12mths in advance!

192-198 Pennant Hills Rd Thornleigh NSW
For sale
Tenant pays 12mths in advance
15yr lease
$549k net rent pa
Burgess Rawson Sydney

 

That would be great! You buying it @Beano?

 

Nice

Amazing how many people (tenants) say they want rental security, yet after a few months end up late paying or falling behind

Being well in advance keeps the LL happy, and therefore less likely to terminate occupancy

 

The Caltex is well frequented too, so I doubt they're going out of business any time soon.

All I could find in the code is that they're looking for over $5M, but that was a given anyway.

 

Caltex as a tenant, very nice. If it sells for 5% yield, that is $10m. Assume an investor would go for higher yield, so maybe sell for $7.5m?? Who pays land tax? On $10m, that would be about $175k per year. Is this ordinarily passed onto the tenant, and is in addition to the $549k?

 

Ad says the tenant pays all outgoings. So, includes water and rates, etc but does it include land tax? And if so, how is it calculated? As if it was the landlord’s only property in NSW?

 

Rolf, to finance a property like this, would you be targetting a LVR of 60% or better to be in ballpark of doability from finance perspective? So come to the table prepared to put ~$3-$4m down (assuming yield ~5-7%) on $10m purchase? And could you get close to resi rates?? Say 4.2%

 

Something like this is the end game plan for me. A while off yet though!

 

Read the lease. It's not always a given the tenant pays land tax and at which rate.

 

That was my understanding as well.

 

Commercial sure, not servo though

 

Other than environmental and contamination issues, are their other factors that weigh against service stations? Obsolence with driverless and electric cars???

 

Not quite so clear cut - as a servo often sits on a large parcel of land it may be exempt from the retail leases act (if this is the only lease on the premises (workshop/take away etc may be subleased)

Land value is a shade over $3.8M, not $10M

 

Thanks. So land tax based on land valuation, which does not necessarily equate to sale price.

 

If you are into petrol stations - alternative option - 438 petrol stations that pay rent 12 months in advance, annual 3% rental increase, average lease of 13 years, selling at a 7% yield:

Viva Energy REIT | Investors

 

Interesting. Notice the ‘MER’ is only 0.24%. Suspect it is difficult to beat that owning a single patrol station plus you get the diversification.

 

Depends on the State.

 

This is generally the case in Victoria. Technically the landlord could pass on all of the Land Tax associated with the property, but the standard clause in commercial leases is that the landlord can only recover from the tenant the amount of land tax assessed on a single property holding basis. Unless, of course, the retail leases act applies, in which case no land tax is recoverable from the tenant.

Something else to note is that if Caltex (or a subsidiary) is the tenant then the lease would be exempt from the retail leases act because they are a listed company. However, I believe quite often service stations can be franchise set ups in which case the retail leases act would likely apply.