Reserve declared before auction

[fudosan]

How about bidding while knowing the reserve price?

Look at this ad, with net rent of $70,148 and "DECLARED RESERVE 10% NETT YIELD." A simple calculation will tell you that the reserve is 701,480.

137 Quay Street, Princes Wharf, Auckland CBD

250sqm Commercial office strata. Established Tenant NO GROUND RENT - PREPAID Genuine nett lease Nett Income $70,148 plus GST What return will get you excited? Motivated vendor has new plans.

Source: http://www.citysales.co.nz/property/...office-strata/

[Keithw]

aahhh Fudo - you forget that you are probably dealing with realestate agents that think if you put in 20% cash deposit then the 10% yield is on the remaining 80% !!!!!! how many times have you seen that sort of thing advertised ?

good spotting though- have you got a spare 700k ?
may be worth a look if there is no ground lease- which is the killer down there.- although it says prepaid, not paid off !

[Davo36]

Leasehold property though right?

[fudosan]

I have leakyphobia, so can't get close to Princes Wharf.

[Mr_bond]

Leasehold property though right?

They are leasehold, but only the residential units pay ground rent, the commercial units have their ground rent pre-paid.

I think the leasehold term is 99 years on the commercial, so it is almost a virtual freehold. Residential have a mix of 50 and 99 year terms.

The potential leaks would keep me away as well although the return looks attractive for something like that which should lease well.

[CJ]

How about bidding while knowing the reserve price?

Citysales is well known for doing this, though normally it is a no or low reserve.

In some way it is good as you know it will sell rather than the vendor having unrealistic expectations. Surely the only thing worse than being outbid in an auction is 'winning' but the Vendor still refusing to sell as 'market price' is under their expectations.