Commercial property capital value is largely based on the yield. Right now the current yield is about 5 % due to increasing interest rates forcing up yields. Twelve months ago yield was 3.5% due to low interest rates suppressing yields. So if you bought 12 months ago and you decide to sell now, the capital value of the property just dropped about 30%. It's a bad time to sell commercial property, you are taking a substantial haircut. Conversely if you buy when yields are high due to high interest rates forcing up yields you will make a lot of capital money when the borrowing rates drop due to a pivot.
Thanks for this great video! One point of disagreement here: You mentioned you were charging a lower rent than you should since your tenants do a lot of the maintenance and they've been there for a while. It seems to me that this idea would lead to a culture where tenants dont feel like they can communicate issues for fear of rent increases. In turn this can lead to unhappy tenants living in dilapidated housing. Imo it is better to embrace capitalism, charging competitive rates with flawless maintenance.
You literally have a video for every question I have!
Thank you so much for the content you create, please keep doing what you’re doing!!
Thank you! So glad I could help and I appreciate your support 🙏
You’ve missed one main facts..YIELD..on resi stuff your netting 2.5-3% with commercial it’s double that
Commercial property capital value is largely based on the yield. Right now the current yield is about 5 % due to increasing interest rates forcing up yields. Twelve months ago yield was 3.5% due to low interest rates suppressing yields. So if you bought 12 months ago and you decide to sell now, the capital value of the property just dropped about 30%. It's a bad time to sell commercial property, you are taking a substantial haircut. Conversely if you buy when yields are high due to high interest rates forcing up yields you will make a lot of capital money when the borrowing rates drop due to a pivot.
Thanks for this great video!
One point of disagreement here:
You mentioned you were charging a lower rent than you should since your tenants do a lot of the maintenance and they've been there for a while.
It seems to me that this idea would lead to a culture where tenants dont feel like they can communicate issues for fear of rent increases.
In turn this can lead to unhappy tenants living in dilapidated housing.
Imo it is better to embrace capitalism, charging competitive rates with flawless maintenance.
Hey Ravi, nice video!
What are some capital growth figures for different commercial property types?
What’s your thoughts on the SDA/NDIS properties being advertised on social media claiming over 9% yield?
I’m defs not a fan! I can see how it works well in some cases but, I wouldn’t personally go for them.
what about the ression we are IN?
lol, we are not in a recession.
I prefer Residential Properties
Commercial seems way too expensive for me 🤣
I saw a deal today at $10M+ and realised yeaaahh no thanks 😂