LVR for big commercial properties

[Glenn]

Glenn, the old "Vendor leases the property and sells it" is the oldest trick in the book and the first one to look for in the C&I world. If they have to lease the whole or part of the property themselves, it means a) They can't find a tenant, b) Whatever they are paying will almost certainly be over the market value for the space and c) They will vacate it as soon as they are possibly able to - and often before - just walking away from the lease after settlement - leaving the purchaser to chase them through the courts.

You are right but the return out weighs the risk. It has to be about length of time of the facilitator in market and their ability to keep doing it time after time.
Something nasty happened to the market, the tenants and the syndicator. I am sad the chickens have not hatched but the ship is still afloat. The main issue is to have your eggs spread around in commercial. I have another property with four tenancies. That was purchased off Post and they stayed on as one of the tenants. That has worked well but now they are retrenching and I have to find a new tenant for a difficult bit of property. This is the risk we take. Very different to residential.

[Maccachic]

I disagree with this.

I couldn't think of a property professional less likely to be of any use. May as well ask the tea lady. Valuers are overly cautious IMHO.

A real estate agency would be better. Someone like Bayleys, or Colliers etc.

Our valuer's carry these out for investors regularly the majority as part of the due diligence /feasibility reports, before purchase / construction - can be in combination with other services as well. I'm not talking about your residential valuer but specialist commercial property companies.

[Davo36]

Our valuer's carry these out for investors regularly the majority as part of the due diligence /feasibility reports, before purchase / construction - can be in combination with other services as well. I'm not talking about your residential valuer but specialist commercial property companies.

A) Yeah this is really a caveat emptor thing.

and

B) If these guys are so good at turning properties around, why are they working for your firm?

[Glenn]

Well we have held our meeting of fellow investors. This was the first meeting in 6 years of ownership. All good people who can teach me a thing or two.
I have come to the opinion that Sir Bob Jones is right. Syndicates consisting of one property are not a good idea. They are no better than those first properties we all purchased when we pushed our finances and luck to the limit to get onto the ladder.
I would value other investor's opinions on this statement,

[Maccachic]

A) Yeah this is really a caveat emptor thing.

and

B) If these guys are so good at turning properties around, why are they working for your firm?

Pretty sure they have interests outside their day job

[speights boy]

Syndicates consisting of one property are not a good idea.
They are no better than those first properties we all purchased when we pushed our finances and luck to the limit to get onto the ladder.
I would value other investor's opinions on this statement,

I have had a look at one or two, but decided to stick with my six Listed Property Trusts.
Sure, returns not as sexy, but their model suited my investor style as I wasn't interested in a sole purchase.

a: consistent returns from multiple buildings;
b: gearing normally below 40%;
c: when they do a capital raising for a new purchase it is usually at a small discount and oversubscribed;

However, for me the most important feature is liquidity.
Something that doesn't always feature for some people.......until it is needed.

If needed, having the money in my account in 3 days, costing only 0.3% brokerage.
I haven't needed it yet, but I am prepared to 'pay' for this insurance.

[Davo36]

Pretty sure they have interests outside their day job

Fair enough, and of course, you could have made the same argument about real estate agents still having a day job

What I'm trying to say though, is the best people to talk to about turning properties around are the very people who have done it in the past. not someone who has seen someone do it, or reckons they know how to do it, but people who have actually done it.