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Affordable fast food asset

Rethink Investing’s acquisitions team recently secured this commercial property before it was listed online. The property is an exceptionally rare and affordable fast-food asset in NSW. The investment clears over $38,000 in passive income for the new owner. This is after 100% of the outgoings and 70% of the mortgage costs at the current interest rates!

Note: There is a 10-year lease with 4×3 options taking the final expiry to 2041. This is our client’s first property with Rethink Investing. They were looking for a secure, low-risk investment to help them build a reliable passive income. This deal was perfect for them as it was well under their budget and ticked all the boxes in terms of a long lease, strong rental income growth potential and an established business.

Purchase Details
Asking Price
1550000
Purchase Price
1475000
Deposit (assuming
70
% debt)
442500
Stamp Duty
70840
Building Report*
800
Solicitor Cost*
7500
Valuation*
3000
Other Costs*
Other Fees* (Depreciation
report, bank fees)
1550000
Total Cash Required
524640
Purchase Price + Purchasing Cost
1557140
Net Annual Cash Flow Return
93000
Net Yield on Property
6.31
%
Net Yield Accounting for
Purchasing Costs
5.97
%
Cash-OnCash Returns
Deposit Needed =
% + Costs
524640
Cost of Loan
(Assume
5.25
% pa on
70
% debt)
54206.25
Return of Equity
(Pure cash flow return)
7.39
%
Return of Equity with a
5% Capital Growth Rate:
21.45
%
Return of Equity with a
7% Capital Growth Rate:
27.07
%
Return of Equity
10% Capital Growth Rate:
35.51
%
*approximate number

Key Highlights

• Building Area: 523m2

• NLA: 523m2

• Long-standing fast food business established in 2004

• Current net rent: $93,000pa net + GST

• Recession-proof asset

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