EP. 1402 Tale Of A Sale - Forrestville The Centre

Ever wondered how everyday Australians are building wealth through commercial property? This episode reveals the complete journey of a $365,000 commercial property sale in Forestville that's challenging traditional investment wisdom.

We take you behind the scenes of this fascinating transaction where a local Forestville resident purchased a podiatry practice with an impressive 6% yield - nearly double what's typically available in residential investments. The buyer wasn't even actively looking for an investment opportunity but recognised exceptional value when they saw it. Meanwhile, the seller achieved their goal of monetising their asset while creating a smooth transition path toward retirement through a sale-leaseback arrangement.

The most groundbreaking revelation from this deal? Commercial property is becoming dramatically more accessible to average investors. New financing options now require just 10% deposits (90% LVR) with interest rates only marginally higher than residential loans. We break down the actual numbers: approximately $60,000 deposit on a $365,000 purchase, with monthly repayments of about $2,100 against rental income of $2,000 - creating a nearly neutrally-geared investment from day one. For listeners who've been curious about commercial property but intimidated by traditional entry barriers, this episode provides a compelling case for reconsidering this asset class as part of a diversified investment strategy.

Ready to explore similar opportunities? We even share details of another promising commercial property on Fisher Road with a long-established law practice offering a secure 5+5 year lease. Subscribe to our podcast for more insights that challenge conventional property wisdom and open doors to wealth-building opportunities you might have overlooked!

Transcript

The $365,000 Forestville Property Sale

Speaker 1 0:02

The tale of the sale where a Forestville property sells for $365,000. We're going to talk about who bought it, who sold it and how we did it. Stay tuned, I'm the ringleader who bought it.

Reasons Behind the Transaction

Speaker 2 0:37

A lovely local Local. If you're familiar with the Forestville Centre. Kids go to school up the road. He's lived in Forestville all his life, saw the opportunity, wasn't specifically looking for an investment opportunity, but came across it Too good to be true. And a week later we were on the ball rolling for exchange. Who sold it? Lovely couple, professionals that have been up there podiatrists, for many, many years, so real again, a local as well. They live just behind, about five minutes behind the Forestville Centre area. But yeah, local business and they'll be renting it back and staying.

Commercial Property Financing Explained

Speaker 2 1:25

Why did they sell it? Wanting to move on, um, basically wrap down uh, business. I think the owner there was looking to retire in the next couple of years. So, as opposed to owning the asset and having to deal with that, after she thought, let's deal with that now, sell it, I'll rent it back off the new owner so I can slowly um, you know, slowly wind down the business and let her patients go. She felt that, obviously being a health or doctor type service, that she just didn't want to shut up shop and then all her patients had to find somewhere new. So this was the perfect solution for her. Why did they buy it? Well, why did they buy it? Great investment, great return. Um based on the yield um and the rent back from the owner purchasing it at 365 000 uh, the net net yield was was around six percent.

Speaker 1 2:15

you compare that to residential market, that's almost double how much deposit will a normal person have to put in for a commercial?

Speaker 2 2:23

property Guys. Big news came out of this recently. Essentially beforehand, you would need to require a 30% deposit. There are now new loans available. Speak to your brokers where they're offering 90% LVRs, which means a 10% deposit and interest rates that are similar to a residential loan. How?

Speaker 1 2:42

much is the interest rate that you'll get for it when you buy it? What's the?

Speaker 2 2:46

interest rate from the bank Not too far off. There's literally a 0.5% difference. So you're looking at 6.7 on some of the rates that I was looking at this morning, so not too much of a difference to your residential interest rate.

Speaker 1 3:01

Have you got a calculator on you?

Speaker 2 3:04

I do rate.

Another Investment Opportunity Revealed

Speaker 1 3:11

Have you got a calculator on you? I do. If I'm borrowing, if I'm putting in 60 grand and I'm gonna borrow 300 grand, what's the?

Speaker 2 3:18

repayments on 300 grand.

Speaker 1 3:24

One moment loading beep, beep, beep, beep, beep, beep, beep, beep beep and we have it, so you're looking at about one hundred and thirty dollars a month.

Speaker 2 3:38

So if you think about that, five hundred plus gst a week, how much is that a month? Over $2,000 nearly off square.

Speaker 1 3:47

How much are the payments? A month $2,100. How much is the rent? A month $2,000. That is the tale of a sale, a property that sells. For how much?

Speaker 2 4:04

$365,000.

Speaker 1 4:05

the tale of a sale a property that sells for how much 365 000 is is almost pretty much positively geared right on the borderline there. That is a great purchase, a great sale in forestville. Do you have another one of those to sell?

Speaker 2 4:18

yes, we do. We have one up at fisher road. Um, fisher road, we have a long, long serving uh law practice up there. Similar scenario owners willing to rent back one of the offices on a five by five guys. That means a five-year lease with a five-year option, so don't worry about your vacancy rates. There's also one next door. So two separate titles. One would be leased out before you settle, guys, we can start looking for tenants as soon as you exchange. So, um, again another opportunity to walk into an investment that it it only makes sense, so it's 4 slash 49, the center forestville.

Speaker 1 4:59

Look it up, we sold it. That's the tale of the sale happy owners, happy sellers. Congratulations, happy, happy real estate agents. Congratulations to everyone all around, josh, well done.

Speaker 2 5:11

Thanks, Bob. Thanks, I agree owners and the and the new owners.

Speaker 1 5:17

Boom say take it.