Hi All
After major personal milestones (which result in financial setbacks) including a home renovation and preparations for a baby, I'm once again looking to take the first steps into commercial property. Among the enormous prices and tiny net yields, I keep coming across high net yield leasehold commercial properties, primarily in Rotorua and the surrounds.
Now, I don't touch residential leasehold, ever. The land is where almost all the value in a home is stored. But in Commercial property the value is usually seen to be in the rent attainable. Can anyone with a bit more experience tell me why properties such as those on Eruera Street in Rotorua with 12-13% net yields (21-24% Gross), wouldn't be a good move?
Some of the lower value ones in the $200-300k area could even be leveraged mostly or entirely off my residential properties, so no problem with commercial lending terms and 10-year principal paybacks - though at 13% net yield, you'd be able to handle a 10-year principal payback anyway.
Thoughts, please?
After major personal milestones (which result in financial setbacks) including a home renovation and preparations for a baby, I'm once again looking to take the first steps into commercial property. Among the enormous prices and tiny net yields, I keep coming across high net yield leasehold commercial properties, primarily in Rotorua and the surrounds.
Now, I don't touch residential leasehold, ever. The land is where almost all the value in a home is stored. But in Commercial property the value is usually seen to be in the rent attainable. Can anyone with a bit more experience tell me why properties such as those on Eruera Street in Rotorua with 12-13% net yields (21-24% Gross), wouldn't be a good move?
Some of the lower value ones in the $200-300k area could even be leveraged mostly or entirely off my residential properties, so no problem with commercial lending terms and 10-year principal paybacks - though at 13% net yield, you'd be able to handle a 10-year principal payback anyway.
Thoughts, please?
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