Little ray
of sunshine
| Unless you have experience with commercial property, don't. You don't even know what you don't know.
The fish is mute, expressionless. The fish doesn't think because the fish knows everything. |
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Member
| quote: Originally posted by jhe888:
Unless you have experience with commercial property, don't. You don't even know what you don't know.
This times 1000. The risks associated with commercial real estate are ridiculous. If you just need real estate exposure, research and find some high quality REITs. The previously mentioned Realty Income, and W.P. Carey Co are both well managed companies that you may want to explore. |
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Partial dichotomy
| He said he owns the property next door. "I should add that I own adjacent property on one side which has been under lease for 8 years. It's done well for me but the numbers on the one I'm now considering aren't nearly as good."
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| | | Posts: 40347 | Location: SC Lowcountry/Cape Cod | Registered: November 22, 2002 | 
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Member
| quote: Originally posted by ridewv:
There is a commercial property in a desirable part of town that may be available and I have some money sitting in a bank making very little interest. Property can be leased triple net meaning the tenant would be responsible for maintenance, utilities, property tax, basically everything. At the cost I'd have to pay it'd return about 8% per year for the first 3-5 years at which time I could modestly increase rent.
Would this be considered a poor, fair, or good investment?
I wouldn't touch another commercial property without a minimum of a 15% return. It's just too much headache. Yeah, in 3-5 years you can raise rents, but also in that time period all of your expenses go up. If it goes empty in between tenants, there go all of your profit for years. Yes, triple net covers most things, but not everything. |
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Member
| quote: Originally posted by ridewv:
jimmy I'm thinking you may be right, it just seems like too much effort and risk for only 8%.
It is, you're buying yourself grey hairs and a headache!!!! You can easily find 5% safely right now, and 8% safe return when interest rates go up and zero headache. The other option is to make them a lowball offer that makes the numbers better in your favor, if they say no......then no worries. You can get great deals when you don't need something. |
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