Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie

commercial property question/rent

Options
  • 18-09-2010 11:11am
    #1
    knighted_1
    Closed Accounts Posts: 870 ✭✭✭


    what is the rental yield agents try to to achieve on commercial property ex vat ?

    viewing a unit and the for sale price is E250,000 or rent negotiable -trying to work out what realistic rent would be on this by way of percentage yield .

    i know factors like location and footfall etc come into play.


Comments

  • Options
    #2
    triskellion
    Closed Accounts Posts: 37 ✭triskellion


    If you really are serious about getting a valuation on the unit, might be no harm hiring another agent to do it. Plus that way when you come in with an offer you have more ammo.


  • Options
    #3
    Dymo
    Registered Users Posts: 1,561 ✭✭✭Dymo


    Rule of thumb for that property would be €16,000 per year or €1,350 per month on a FRI lease but things have changed a lot, so it should be negotiable.


  • Options
    #4
    knighted_1
    Closed Accounts Posts: 870 ✭✭✭knighted_1


    so you reckon as a rule of thumb ,roughly 7.5% of property value should be asking price for rent ?


  • Options
    #5
    Dymo
    Registered Users Posts: 1,561 ✭✭✭Dymo


    Lease's on commercial property can be very complicated things when deciding rental value, there is a mathematical way of taking into account shop frontage and the dept of the shop being the first few meters of the building being more expensive than the back of the shop and other factors. If the lease is over 5-20 years you take into account the rate of inflation.

    But a quicker way used by a lot of estate agents as a rule of thumb is value of the property divided by 15 years gives you the yearly rent or the opposite way the rental value of the property multiplied by 15 gives you the value of the commercial property. Private residencies can be done differently due to the length of mortgages compared to commercial mortgages but if you got a 4% yield on a private residency would would be doing well. These methods were used long before the property bubble in Ireland.

    But no two properties are the same and other things have to be taken into account that's why if building a business plan for a bank, an educated estate agent should be used to work out the rental by formula.


Advertisement