Starting in Commercial Property Investment and Property Outlook - Helen Tarrant

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Commercial Property Auctions In the last three to
six months, with the rate rises, weve seen more
auctions in commercial property specialist in
Australia than ever before. Today we are going
to look at tips, tricks and myths about
commercial property auctions. When I first
started in the industry, it was mainly
expressions of interest and private treaty,
but over the years weve gone to auction format.
Really, its the vendor wanting unconditional
contracts. They dont want you to do your due
diligence and they want to know that youre
going to buy the property regardless of whether
your finance is ready or not. So, how do you
guarantee that youre going to get a good deal
when youre going to a commercial auction? The
simple answer is to do your due diligence and
make sure you are armed with as much information
about the property before you get
there. Sometimes, you really dont have time to
line up your finance because you dont know what
price youre going to get the property investment
event in Australia for at auction. If you dont
have time to get a valuation, you need to make
sure you get the longest possible settlement
that you need at the other end. So, the number
one thing I look at if theres a property I
really like is to get an extended settlement. If
Im in Melbourne I can get 30 / 60 / 90 days. I
always try for 90 days (failing that, I push for
60 days), because I know that I can get a Lease
Doc loan failing everything. A lease doc loan
does not require full evidence of your income,
instead the lender relies on the strength of the
rent income from the property used to secure
your loan. So they are similar to a low doc
commercial loan You can borrow up to 70 of
the property value. Thats a safeguard with
commercial properties that Lease doc loans can
be done between four to six weeks. So, as a rule
60 days for settlement should be fine but you
are better to maximise your time if
possible. Now if youre in New South Wales, its
normally a 30 day option. We try to push for 42
or 60 days. In NSW, very rarely do you get 90
days. do you get 90 days. In Queensland you can
nominate, but most of the time its 30 days
again. And of course, we try to get 60 days for
settlement. So, overall, we try to push for at
least 60 days as much as possible to line up the
finance on the other end. Of course, you never
know what the valuation is going to come in at.
So if there is a property thats fairly large,
and youre not sure whether youre going to be
able to get the value coming in on price, one of
the things that you need to do is get a
pre-purchase valuation, which costs anywhere from
1500 to 2500 depending on who you
use. Typically you use the same valuers as you
would if you were going through the bank. Of
course, youre instructing them and not the bank,
so their criteria is going to be a little bit
different. Let them know that you want them to
value it as if they were valuing
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• for the bank and they will look at things a
  little bit harsher, theyll get some different
  comparisons for the best real estate buyer agents
  in Australia and give you more accurate ideas on
  whether youre going to be able to come up with
  the valuation you need to proceed. But with
  pre-purchase valuations, you need to understand
  that if you were not the winning bidder then you
  forfeit the cost as well.
• Its so important that you line up your finances
  in the back end before you go to auction. You
  need to make sure
• youve got enough deposit, make sure youve
  already checked with your finance broker or the
  bank
• you can get the finance
• you are happy with the rate
• You know ( understand) the terms
• But the most important thing to think about is
  actually due diligence. This is where the tips
  and tricks come in. The myth is that at auction
  you get your best deals, but they actually work
  for the vendor more times than they do for a
  purchaser. So you need to make sure you dont
  over bid. You have to know your numbers, and you
  have to know where it is youre stopping your
  ceiling. Because that is where most people make
  the mistake. Investment property buyers in
  Australia they go in and they buy too high or
  they go in and what the agents given you is
  misleading. I can tell you right now
  categorically, almost all agents are going to
  give you a lower end amount for you to come in
  to encourage everyone to bid against each other.