澳洲Australia property Commercial property valuations - how do y


在澳大利亚 Hi everyone, After months of searching for my first IP I believe finally have the corage to put in my first offer. I would love some feedback Property: Duplex Asking price: $239,000 I believe it is worth $225,000 to $230,000 My Offer: $218,0 I am in Melbourne. Would like to buy properties interstate. How difficult is that to manage these properties. Any advise. 评论 Do you mean manage to find them or manage as in property manager? 评论 Manage to find a good property manager 评


I own a cracking commercial property in Brisbane, but I'm very frustrated at how much equity I'm having to leave tied up in it due to low valuations. Extensive consultation and research tells me that it would be reasonable to put it on the market around the $1.7M mark, and that you'd be confident at getting over $1.5M "any day of the week". (Net Profit $120K in postcode 4000.)

Yet I've had two commercial valuations the past few months, both of which originally came in at $1.15M :eek:, and upon protest from both myself (AND the lender!) revised upwards to $1.3M. (One wonders if they knew each of each other's valuation?) At either $1.15 or $1.3M, I reckon I could almost sell it for cash within the hour!

Having the valuation come in at $1.5M would release more funds for me to use as deposits on further investments. I'm frustrated because I have excess borrowing capacity and have deals I want to do; it's free equity I'm low on right now.

Any tips on getting commercial valuers to provide a valuation that at least somewhat bears a resemblance to market valuation?
 

评论
ozperp said: ↑
Extensive consultation and research tells me that it would be reasonable to put it on the market around the $1.7M mark, and that you'd be confident at getting over $1.5M "any day of the week".Click to expand...
Why don't you....and see what nibbles you get ?? Buyers written offers trump both your "extensive research" and sworn valuations from valuers every time.

Is it leased ?? If so, what is the nett yield on 1.7M ??

Does it have land associated with it ??

Is it fully developed ??

What's the potential of the joint ??

What's the zoning ?? That has a massive impact on the value. Are you allowed to build 3 storeys or 30 storeys on it.


ozperp said: ↑
At either $1.15 or $1.3M, I reckon I could almost sell it for cash within the hour!Click to expand...
As does every Vendor think their place is worth more than the Valuers assign to it.



ozperp said: ↑
Any tips on getting commercial valuers to provide a valuation that at least somewhat bears a resemblance to market valuation?Click to expand...
You haven't detailed what type of property it is....other than comm in 4000 Postcode, and looking at Brissy CBD, there's a huge variety. The exact type of prop. will dictate which way to go.

Unfortunately, because the Lender controls the show (rightly so as it is their money you're trying to borrow), the valuation they ask the Valuer to do is usually for mortgage lending purposes, to securitise their money. There is a large fat margin in there for their comfort. They don't like you encroaching on it. This of course, is on top of the usual 70% LVR.

The type of valuation they commission for themselves that you pay for has little bearing on what the property is worth on the open market. You seem to be trying to link the two....but they aren't linked.

More details on "it" might improve any suggestions. :)  

评论
Dazzling said: ↑
Why don't you....and see what nibbles you get ??Click to expand...
My real estate agent - who specialises in this niche (multi-tenancy) - showed it to several other investors in this niche and I got an offer of $1.62M. It didn't seem to make any difference to the valuers.

Dazzling said: ↑
Is it leased ?? If so, what is the nett yield on 1.7M ??Click to expand...
It has multiple leases yielding $120K net, so on $1.7M would be 7.1% - not bad for Spring Hill methinks.

Dazzling said: ↑
Does it have land associated with it ??Click to expand...
374m2, and yes, probably fully developed at this point, but previous offer took this into consideration. Current zoning is residential with an approved MCU for multi-tenancy. So, yes, it's not suitable for building an office block on - at least at this stage - but it's in an area of Spring Hill very close to the St Paul's Tce/Boundary St corner, not stuck way in the depths of the suburb, so I can see it having approval for more intensive development in time.

Dazzling said: ↑
As does every Vendor think their place is worth more than the Valuers assign to it.Click to expand...
Well of course!

Dazzling said: ↑
The type of valuation they commission for themselves that you pay for has little bearing on what the property is worth on the open market. You seem to be trying to link the two....but they aren't linked.Click to expand...
Perhaps there's the rub - I was told that the lender had asked for a market valuation, and that the valuation should reflect the market. And the lender certainly appeared to genuinely agree with me regarding the valuations - they actually loaned me 85% of a valuation a bit HIGHER than the $1.3M.... I don't think they'd have done that unless they were very confident in the value of the property.
 

评论
G'day Tracey,

Agreed....7.1% nett yield doesn't seem outlandish. The market would pay that. At 1.3M, the yield rises to 9.2% nett, which seems too high in 2008, therefore 1.3M seems too low.



If you haven't read it as yet, I'd ask for a copy of the valuation report. I wouldn't be surprised if indeed the Valuer has taken written instruction from the Lender on not a market evaluation, but on a basis similar to this wording ;


"This report has been prepared expressly under instruction from Bank XYZ for first mortgage security purposes and should not be relied upon for any other purpose or by any other party or person other than Bank XYZ".....

Tracey that includes the Owner of the property !!!!



.....and then there is the Prudent Lender Clause which shakes it up again.....and definitely affects the only number everyone is interested in.


"This valuation is prepared on the assumption that the Lender as referred to in the valuation report (and no other) may rely on the valuation for mortgage finance purposes and the Lender has complied with it's own lending guidelines as well as prudent finance industry lending practices, and has considered all prudent aspects of credit risk for any potential borrower, including the borrower's ability to service and repay any mortgage loan. Further, the valuation is prepared on the assumption that the Lender is providing mortgage finance at a conservative and prudent loan to value ratio".


If any of those things listed....and there is a few, are not adhered to, then the value quoted goes down commensurately.


Nowhere does it actually say....."we certify that the Owner of the property could get X out in the market".


As mentioned previously on this forum, what we as investors "think" the up-to-the-minute valuation out in the rough and tumble market place is, vs all of those layers of conservative, prudent institutionalised legal ar$e covering waffle.....well, they are two different things and you shouldn't try and link them.

Good luck Tracey.  

评论
Yes, I hear your point Dazzling, and perhaps that's just the way it is, that bank valuations will be well below market. Thanks for taking the time to reply.

I guess then what we investors need to be aware of - and I freely admit that perhaps it's just me that hadn't realised this yet ;) - is that whilst we say that one only has to leave, for example, 30% equity in a commercial property, if the valuation criteria result in a valuation that's only 75% of it's market value, then in reality you have to leave in 45 to 50%, when you consider your free equity position relative to what you could realise by selling.

In any case, I'm still happy with my investment :D

Perhaps I'll try and do some "no money down" deals the next year or two, then try and get another valuation on this property at that time, to free up some equity.
 

评论
ozperp said: ↑
I own a cracking commercial property in Brisbane, At either $1.15 or $1.3M, I reckon I could almost sell it for cash within the hour!Click to expand...
W:rolleyes: hy not sell the property,and invest the money somewhere else i'm just interested to know the location of the property, not may can say they can drop a property in one hour for cash,the money is just not out there, but it may be different in the waters you swim in....
willair..  

评论
As I've said in the thread, the property's in Spring Hill, near Oxygen (Boundary St/St Paul's Tce corner). I've spoken to Dazzling and at length with grossreal, and realised the problem is the way I've structured the lease(s). At grossreal's suggestion, I'm restructuring the lease (separating ownership and management, getting a management company to take out a 5x5 commercial lease for entire premises, instead of having many individual short-term leases) and grossreal reckons that upon doing that I'll be able to get a valuation of $1.9M based on his assessment of the figures I've provided him! :eek: Sounds optimistic to me, but he's far more experienced than I am. If I even get closer to the $1.62M I was offered about 6 months ago, I'll be delighted.

I could sell the property, but it's already quite cashflow positive ($120K net) and I don't think I could find a comparable property to re-purchase, especially after the CGT hit and turnover expenses (stamp duty etc). I don't want to sell; I view this as a great foundation for our portfolio. I simply want to release more equity so that I can continue investing. And I think that I've found a way to do that...  

评论
Good luck with it Oz im glad you found a solution.  

评论
Thanks, Giulio, for your kind words.

And incidentally: willair, yes of course selling within the hour may have been a wee exaggeration :D My point was that I believe that this was a very significant under-valuation. Hopefully the separating of management and ownership will remedy the situation...  

评论
ozperp said: ↑
My point was that I believe that this was a very significant under-valuation. Hopefully the separating of management and ownership will remedy the situation...Click to expand...
Yes i know the area,can't see how you could go wrong in that part of Brisbane well done.
..willair..  

评论
ozperp said: ↑
As I've said in the thread, the property's in Spring Hill, near Oxygen (Boundary St/St Paul's Tce corner). I've spoken to Dazzling and at length with grossreal, and realised the problem is the way I've structured the lease(s). At grossreal's suggestion, I'm restructuring the lease (separating ownership and management, getting a management company to take out a 5x5 commercial lease for entire premises, instead of having many individual short-term leases) and grossreal reckons that upon doing that I'll be able to get a valuation of $1.9M based on his assessment of the figures I've provided him! :eek: Sounds optimistic to me, but he's far more experienced than I am. If I even get closer to the $1.62M I was offered about 6 months ago, I'll be delighted.Click to expand...
This sounds like a positive approach to the situation, and I would love to hear an update on this. It seems logical that a more secure lease means more security on lending perspectives.


GOOD LUCK

P.s Would this approach mean you will be getting less rent, as multi tenancy tends to give you better yields?  

评论
Not getting the valuation you want? My experience has been to virtually do the valuers work for them... consider, they usually contact you as the owner, and ask for copys of lease's, surveys etc... at that point, you got a dialogue going... i present the valuer with my written valuation range based on methodology i know he's going to use... he's going to compare your property with what's happenning nearby... so hand feed him nearby rents and sales (which I keep in an excell files with dates, sizes, $$, etc)... then talk his language... value range is $.... based on ...capitalised rent and size of land/building size... plus i try and meet the dude on site and talk up the property.  

评论
Thanks, westie. Several other people have also told me this (offline). I asked the valuer to ring my real estate agent for a list of comparables that we'd put together, but I realise now that we should have been more proactive and spoon-fed him more.  

转载出处链接:http://www.china2au.com/html/Property_Investment/2020/0515/446754.html