Any idea what zone your house is in?
Most people have little idea…
And if they do know the name of it, even fewer people know what that means, what you can build there and what the local council wants in that area.
And I've got one more…
An even tinier number of people are up to date with that information.
The reason is that councils change the zones regularly and change what that actually means and what they want in that area even more regularly.
So I shared a deal with you a while back… I shop and apartment I own in Newcastle.
I thought I knew what could be done with that property.
And I did…
They kept changing it.
So when I got a call from my architect saying they've changed the rules for that zone and suggesting we revisit the plans… I thought it was worth exploring.
… And it's lucky I've got people like that on my team, because I certainly wasn't across every little change in Newcastle zoning.
But I mention it because there are some things you need to make sure you are reviewing at least annually with your properties… Especially your commercial properties.
You need to at least annually (I do it twice a year) review your rents and make sure they are at market.
It's amazing how many times I'll be doing due diligence on a property only to find that the landlord hasn't checked the rent and whether it's right for the area, in years…
That's an opportunity!
Your rental guarantee or the value of the personal guarantee that the tenant is using to back the rest in case they go bust and what to break the lease.
Again… I see these all the time, dusty and out of date. These need to be updated to be in line with the rent.
Your zoning and what can be done with the property…
There's huge opportunity here…
In the case of the Newcastle property it meant we got plans approved to build over 4 stories… On a 280 sqm block. That's huge!
That's a potential massive shift in value – even if I don't do the build! I can still get a development approval and sell the property with that… Leveraging a piece of paper and a zoning change into cash in the bank.
The condition of your building… You need to be making sure you or your managing agent is across the condition of your building. Get regular inspections. Do surprise visits.
I own quite a few shops, so I find it doesn't hurt to do a drive by, or wander out the back (where I have lane access) and see what the tenants are doing out the back.
Are they keeping the place tidy or are there piles of rubbish etc out the back where they think no one can see?
Cap rates… What are the cap rates in the area? Have they changed over time since you last looked?
The great thing is that if your cap rates for the area go down because the area becomes more popular, it means the value of your property goes up… And you may have some spare equity in it for you to play with.
That's an opportunity to find more opportunities right?
I find setting a reminder in my calendar and a formulated spreadsheet type process for the things I need to check helps streamline the whole process.
Want to know exactly what to look for, assess which deals are worth your time and how to generate a lifetime income from commercial property? Cool!… Easy… Come to my next free online webcast – CLICK HERE