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Commercial Office 9.1% NET Yield

WE GO COMMERCIAL TOO baby...Purchase #67 by Easy Buyer's Agent. Our client is a repeat local investor and this is our third purchase for him. Asking: $650,000, Purchase: $560,000. This property is already tenanted to a long term tenant earning $51,000 NET income (ie. maintenance, outgoings such as council and water rate, property management fee, etc are all paid by the tenant), making it 9.1% NET yield. Read on.

BRIEF:
Our client, a local Structural Engineer, was looking to diversify his portfolio. After purchasing 2 residential properties with us, this third one he was looking to venture into commercial.

PROPERTY STORY:
Our client was considering any type of commercial properties: from warehouse, office space, etc. The most important thing in commercial property was tenancy. Especially in WA where population was not as big as other states, an empty commercial property always poses a huge risk for an investor. Our criteria for a commercial property is to show at least 6% NET yield.

We finally spotted this office space that has been leased by a long term tenant with excellent net yield.

Being commercial property, the available data was not as much as the residential counterparts. Therefore, we helped our client with the due diligence: from checking the tenant business background to ensure they were indeed strong, reading tenancy agreement, dealing with the selling agent and so on.

Long story short, we managed to secure this property for $560,000 down from the asking price of $650,000. With the earning income of $51,000/year, this property returned a 9.1% net yield. Other than the mortgage interest rate, literally every bit of expense: maintenance, council + water rates, outgoings, PM fee, etc were all paid by the tenant.

 

Looking to buy property in WA? You know who to call. Whether it's residential or commercial, we certainly have tons of information to assist you with. Let's chat property, consultation is free. Until the next purchase. Peace.