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Purchased

Essential service retail investment

Rethink Investing’s acquisitions team recently secured this commercial property with a supermarket tenant on a 10-year lease. There are a total of four tenancies. The investment clears over $137,000pa in passive income and got the new owner. This is after 100% of the outgoings and the 65% mortgage costs at the current interest rates! This is our client’s first property with Rethink Investing.

They were looking for a high-yielding property to help build a passive income. This essential service investment had the best numbers out of any other deals we found at the time. Having multiple tenants also diversifies the income risk for the client.

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Purchase Details
Asking Price
3800000
Purchase Price
3500000
Deposit (assuming
65
% debt)
1225000
Stamp Duty
195213.7
Building Report*
1200
Solicitor Cost*
8500
Valuation*
4000
Other Costs*
Other Fees* (Depreciation
report, bank fees)
3800000
Total Cash Required
1433913.7
Purchase Price + Purchasing Cost
3708913.7
Net Annual Cash Flow Return
256725
Net Yield on Property
7.34
%
Net Yield Accounting for
Purchasing Costs
6.92
%
Cash-OnCash Returns
Deposit Needed =
% + Costs
1433913.7
Cost of Loan
(Assume
5.25
% pa on
65
% debt)
119437.5
Return of Equity
(Pure cash flow return)
9.57
%
Return of Equity with a
5% Capital Growth Rate:
21.78
%
Return of Equity with a
7% Capital Growth Rate:
26.66
%
Return of Equity
10% Capital Growth Rate:
33.98
%
*approximate number

Key Highlights

• Building Area: 1,137m2

• NLA: 3,255m2

• Estimated net income: $256,725pa + GST

• Everyday service tenants include District Coffee Shop, Richard’s Takeaway and Hairdressers Units, providing an excellent mix of daily retail needs

• A brand new 10-year lease to SPAR Supermarket to 2031 plus options through to 2041, which represents 67% of the income

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