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It took 6 months to go through but finally the commercial property in Barnstaple completed!!
There are a lot of lessons that I’ve learnt here:
- If you buy a commercial property (that’s wholly commercial not mixed use) lending is harder to get which makes it more expensive… eurgh 7.3%. The reason being, lenders think its risky because its low value which MUST mean your tenant isn’t that great
- If you simultaneously exchange and complete on the same day the lender is going to want you to get insurance on the building before you own it… to resolve the problem make sure you agree a quote with the insurer first and get them to start it on the day you want to complete
- Second charge loans are expensive and the legal fees may mean its better to go through a private investor… I’ll let you make that decision when you listen to the podcast!
However, there are still reasons why I pressed on regardless and that’s the beauty of it:
- It’s a net 4.69% yield / £644.89 net income pcm on a purchase price of £165,000
- The lease runs until December 2024
- It’s a full repairing and insuring lease so I don’t have to do anything to it at all… if I don’t want
- The rental values in the area have gone up since this lease was agreed so it should be around £21,500pa for the whole building which if I agree that at lease renewal the value of the property will jump to £253k, which means I’ll get all of my money back out
- The local council is desperate to develop the High Street and make it better and there is a lot of money being spent to do this… so I’m excited to see what happens
The finance has been expensive. Yes it’s taken a long time to go through… but all of it SHOULD be worth it due to my due diligence suggesting increase in values.
In this weeks podcast I’ll go through my learning from this deal in detail and ALL OF THE NUMBERS associated with it! So you are going to want to listen here.