Commercial, Leasehold

[Beano]

I haven't seen this thread before but if you're considering a lease-hold property don't be fooled by the small increments in ground rent every 7 years or so. There is a termination to the ground lease say 50 years, from which date the rent could then jump up massively. Be very careful in reading the find print of the lease documents with your lawyer.
Another disadvantage is a bigger deposit is usually sought after by lenders.
The big yields might be attractive to someone who wants to be less active and just retire on the interest of their fortunes, but owning lease-holds are not the same wealth builders you can achieve from freehold property.

One of my tenants owned a leasehold . Made almost 1/4 million in about a year on the sale of his leasehold.
Another one of my tenants made about $70k on the sale of her leasehold.
Like all investments you need to do your DD and seek professional advice.
I purchased a leasehold with a 18pc net yield after the ground rent increase the yield dropped to 12pc.
There was no next increase as I purchased the freehold.
It may sound dopey but I borrowed money at 9.5pc and purchased the freehold that was charging me 4.8pc ...probably should have brought another property yielding 10pc...than buying the freehold.

[DaveW]

One of my tenants owned a leasehold . Made almost 1/4 million in about a year on the sale of his leasehold.
Another one of my tenants made about $70k on the sale of her leasehold.
Like all investments you need to do your DD and seek professional advice.
I purchased a leasehold with a 18pc net yield after the ground rent increase the yield dropped to 12pc.
There was no next increase as I purchased the freehold.
It may sound dopey but I borrowed money at 9.5pc and purchased the freehold that was charging me 4.8pc ...probably should have brought another property yielding 10pc...than buying the freehold.

The same can be said for monolithic clad buildings, you can make a good profit buying and selling them but I still wouldn't recommend them as a long term wealth building strategy.

But you're right, with proper DD on an investment you can decide if it's worth pursuing. What has worked for me is empty freehold buildings. Like leasehold and monolithic clads, empty buildings also have a limited buyer pool allowing for some bargain buying.

[nick000]

A friend of mine was considering the same. What sort of industry was the business in

[Beano]

Has anyone read this article about leasehold property sold

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12290167

The purchasers lost $551k on their purchase and the sales agents (Bayleys were fined incl the national compliance manager)

[Davo36]

Has anyone read this article about leasehold property sold

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12290167

The purchasers lost $551k on their purchase and the sales agents (Bayleys were fined incl the national compliance manager)

Would be interesting to see, but it's behind their paywall.

[Wayne]

Would be interesting to see, but it's behind their paywall.

Not that interesting - seems to lack detail.
I can't work out where they lost the money.

[eri]

a start anyway

Three Bayleys agents, including the firm's national compliance manager, have been fined a collective $5500 for unsatisfactory conduct after the sale of a Viaduct Harbour unit, carparks and storage lockers.