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Purchased
Quality entry level asset!
This deal went on for five months, which was a frustratingly long process. However, it was worth the wait in the end because we got a great result for the buyer. Initially the sellers presented the numbers and terms of the lease incorrectly. During the due-diligence we had to renegotiate these unfavourable items which turned a 5.91% asset to a 6.43% net yield.
Purchase Details
Asking Price
1000000
Purchase Price
940000
Deposit (assuming
70
% debt)
282000
Stamp Duty
37819
Building Report*
600
Solicitor Cost*
5000
Valuation*
2000
Other Costs*
Other Fees* (Depreciation
report, bank fees)
report, bank fees)
1000000
Total Cash Required
327419
Purchase Price + Purchasing Cost
985419
Net Annual Cash Flow Return
60420
Net Yield on Property
6.43
%
Net Yield Accounting for
Purchasing Costs
Purchasing Costs
6.13
%
Cash-OnCash Returns
Deposit Needed =
% + Costs
327419
Cost of Loan
(Assume
3
% pa on
70
% debt)
19740
Return of Equity
(Pure cash flow return)
10.99
%
Return of Equity with a
5% Capital Growth Rate:
25.34
%
Return of Equity with a
7% Capital Growth Rate:
31.09
%
Return of Equity
10% Capital Growth Rate:
39.7
%
*approximate number
Key Highlights
• Building Area: 381m2
• CPI rental increases on each anniversary
• 3+3 year lease
• Annual income of $60,420 pa + outs + GST
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