Commercial Specialists
INCOME FROM DAY ONE
It’s all about the cash flow.
An example. Purchase price $1m. Govt costs (including stamp duty) and misc $50,000 Total cost $1,050,000
Option 1
Deposit of 20% say $200,000 plus $50,000 for costs. Total outlay $250,000
80% Commercial loan is $800,000. Assumption is deposit is borrowed on a residential property, say $250,000.
Interest on $1,050,000 at indicative rate of 5.5% is $57,750 pa
Building showing 8% yield say $80,000
Income from Day One
Approx. net income flow is $22,250 pa
Option 2
Deposit of 25% say $250,000 plus $50,000 for costs. Total outlay $300,000
75% Commercial loan is $750,000. Assumption is deposit is borrowed on a residential property, say $300,000
Interest on $1,050,000 at indicative rate of 4.7% is $49,350 pa
Building showing 8% yield say $80,000
Income from Day One
Approx. net income flow is $30,650 pa
Option 3
Deposit of 25% say $250,000 plus $50,000 for costs. Total outlay $300,000
75% Commercial loan is $750,000. Assumption is deposit is borrowed on a residential property, say $300,000
Interest on $1,050,000 at indicative rate of 4.7% is $49,350 pa
Building showing 9% yield say $90,000
Income from Day One
Approx. net income flow is $40,650 pa
The difference between option 2 and option 3 is only the yield. This why a buyers agent though Yieldfinda is so important. You only pay the buyers agent once, however the benefit gained is ongoing. In the above example, the new owner will receive $10,000 a year more ongoing. The longer the tenant stays the more the benefit.
Disclaimer.
The above is a guide and guide only.
