What Happens When A Tenant Leaves

Commercial leases are typically 3 years… that’s the average. They usually have an option… say: a 3+3+3 lease. That means that after the first 3 years the tenant has the option of renewing two more times. Simple enough. It’s not uncommon for tenants to take all 3 options and even renegotiate the lease at the end of that period as well. If a business is going well it usually makes sense for them to stay put where customers know where to find them. But… As …

Valuing Vacant Properties

Buying a vacant commercial property is not something that I recommend for most commercial investors. I’ve only done this a few times… Although it was very successful when I did… But that’s because I had the basics covered and I understood how to work out what the property was really worth. When a commercial property is tenanted, it’s very easy for a valuer to come up with a true and accurate valuation… That’s because the value of a commercial property is intrinsically tied to its …

It’s not about floor space – it’s about opportunity

I’ve noticed a trend in (esp) capital cities… Not just here in Australia but all around the world. Now I’m finally taking a leaf out of this playbook and looking and putting it into action. What am I talking about? Tiny shops. There’s a movement to making shop spaces much smaller. I first really sat up and paid attention to this a couple of years ago when I was in Sydney looking at the Crumpler bag store. It’s not a big store, and the main …

NEGOTIATION STALLED? Here’s how to breathe new life into it.

From time to time when you’re negotiating on a property purchase negotiations can stall. Maybe your offer is too far from what the vendor wants, or maybe you want a “Subject to” clause that they don’t understand or are unwilling to grant. Luckily commercial negotiations can often take quite some time, running over weeks or even months so you may have more time than you are used to, to work through the details of the deal. Here are a few ideas use could use to …

A Crash Course In Honest Numbers

  Getting Honest with yourself about the numbers Over the weekend one of my relatives asked me to take a look at a couple of properties she was interested in buying. They were both commercial, which is why she had come to me. This wasn’t her first rodeo when it came to investing in property. I think she has a flat somewhere – but it was her first commercial. For that reason, she’d already done some research and due diligence. 1- She’d travelled to the …

Why buying remotely is stupid – It pays to go look at it.

I’ve seen quite a few deals where people have bought commercial properties based on the numbers and images from the agent. While, as you know I’m all about the numbers… My basic rule of thumb is the numbers have to work… Never buy based on gut instinct or anything like that. But here’s the deal. If the numbers work… you still should go an inspect the property. Over the last few months, I’ve been looking for a shopping centre to buy. I’ve made an effort …

The 6 core investment objectives for Commercial Property

If you’ve read a few of my emails you’ll know that I’m all about the cash flow… Or so it seems. It’s easy to talk about the cash flow because it leads to what I call the cash flow lifestyle… That’s where I tell you about how I go surfing every morning and lead a pretty chilled life. It’s easy to talk about that stuff because that’s the sexy side of commercial investing… …but it’s not the only thing I look for. It’s one of …

Getting the best price for your commercial property at sale time

For me, commercial is a buy and hold investment. I want good solid properties with little or no maintenance issues… and most importantly, strong leases, good cash flow and happy tenants with stable, successful businesses. When I get properties that like I tuck them away and keep them for the long term. Honestly, why would you ever get rid of a property like that? Having said that… of course, there are times when you’ll want to sell. Maybe it’s underperforming. Maybe there are better opportunities …

How to protect yourself against market fluctuations

It’s funny; I got an email today from someone telling me that they thought that it was not a good time to buy commercial property. They claimed that cap rates are too low to make a profit and the market is too unstable. That interest rates were about to rise, and we are all due for another recession. They also quoted some newspaper talking about how Amazon is coming to Australia, and it was going to kill the retail market in Australia. I dealt with …

Interest Rate Tipping Point How commercial and Residential Compare

The pattern for someone investing in property is that they get told by their accountant to buy negatively geared property to offset their tax. All good – they find a home they can afford, get some renters in and enjoy getting a little of their tax. After a while, the value of the property goes up a bit, and their accountant tells them to refinance and do it again… That’s when the trouble starts. They get the idea that more is better and they want …