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Childcare with 15 year lease!

This recession-proof asset was secured off-market for our client. It’s located in an established community retail strip 5km from Perth’s CBD, with a 15 year lease in place and option to 2046. This is our clients second purchase with Rethink Investing. They were looking for a low risk commercial property with a long lease.

This brand new CBD childcare building is what they landed on. The asset was purchased off-market and without competition. If we didn’t purchase this property, it would have went to auction where we believe it would have sold for more. Off-market deals like this is example of the advantage buyer’s agents can bring even to the most experienced investors.

Purchase Details
Asking Price
5800000
Purchase Price
5575000
Deposit (assuming
65
% debt)
1951250
Stamp Duty
288743
Building Report*
900
Solicitor Cost*
7500
Valuation*
4000
Other Fees* (Depreciation
report, bank fees)
Total Cash Required
2252393
Purchase Price + Purchasing Cost
5876143
Net Annual Cash Flow Return
295000
Net Yield on Property
5.29
%
Net Yield Accounting for
Purchasing Costs
5.02
%
Cash-OnCash Returns
Deposit Needed =
% + Costs
2252393
Cost of Loan
(Assume
4.5
% pa on
65
% debt)
163293.75
Return of Equity
(Pure cash flow return)
5.86
%
Return of Equity with a
5% Capital Growth Rate:
18.23
%
Return of Equity with a
7% Capital Growth Rate:
23.18
%
Return of Equity
10% Capital Growth Rate:
30.61
%
*approximate number

Key Highlights

• Building Area: 528m2

• NLA: 814m2• 15 + 10 year lease

• 76 place centre in prime catchment position

• Security: $148,500 bank guarantee

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