Here is a guideline of things to look for when buying a commercial investment. If you feel it can be improved in any way please email us.
This is not an exhaustive list but it should help you establish the quality of the investment. It is in your interest to always confirm everything with your professional advisers. This checklist is of a general nature and there is no guarantee that this list is correct for you.
| Legal / Price |
| Title |
Ensure the boundaries are clearly marked and physically inspect them. Ensure no future restrictions due to cross
leasing etc |
| Price |
How negotiable is owner likely to be? |
| LIM Report |
Check if any building alterations have a permit if there are any major drainage or roading changes planned
in the area. |
| Building Price per ft2 / m2 |
|
| Land Price per ft2 / m2 |
|
| Rent |
|
| Previous Rent |
|
| Building Rent per ft2 / m2 |
|
| Land Rent per ft2 / m2 |
|
| Comparable Building Rents ft2 / m2 |
|
| Comparable Land Rents ft2 / m2 |
|
| Yield – Reasonable for risk? |
|
| Is there stamp duty/gst to pay? |
|
| Price of neighbouring properties |
|
| Government Valuation |
|
| Other valuations |
|
| Insured amount |
|
| Outgoings (what owner pays if empty) |
|
| Rates |
|
| Insurance |
|
| Body corporate fees/service costs |
|
| Ground lease |
|
| Other |
|
| Building |
| Quality and condition of building |
buy the building, not the current tenant |
| Area of building |
|
| Land area |
|
| Zoning |
|
| Road access / exposure |
is this important for the possible types of
tenants that would be attracted to this building. |
| Parking |
ensure number of car parks is enough for zoning
requirements for any possible tenant. |
| Lease |
| Standard lease |
is it a current law society lease
or earlier one. |
| Changes to standard lease |
|
| When did lease with tenant start |
|
| Length of lease |
|
| Rights of renewal |
|
| Rent reviews |
|
| Rent review formula |
|
| Ratchet clauses |
|
| Personal guarantees |
|
| Tenant pays rates, insurance, valuation fees,
interior maintenance, legal costs for lease (ie net lease). |
|
| Who pays body corporate |
|
| Who pays interior maintenance |
|
| Who pays exterior maintenance |
|
| Who pays water rates |
|
| Tenant |
| Name / Address |
|
| Business details |
|
| Review rental history |
|
| Speak to tenant - happy with lease / property? |
|
| Check guarantors’ security (house, title on house etc) |
|
| Possible to obtain bank rental guarantee? |
|
| Credit check tenant |
|
| Length of time in site / in business |
|
