Scott O'Neill

it gets a little bit hard to qualify and quantify.

So I guess talking to the leasing managers on the ground or your next best bet, they're all going to give you different answers.

If it's a competitor's listing, they're going to tell you it's going to take a long time to fill.

If it's their listing, they're going to tell you it'll take very little time to fill.

take everyone's opinion with a pinch of salt you know it's all going to be varied but um yeah just try to find actuals you know when how long similar properties have been vacant for and then that can come back into your risk profile to say you know look if there's a three-month vacancy with this property i can deal with that situation i like this deal i will proceed on that basis but if it was a two-year vacancy forget it that's not for you

when i first started looking into commercial property many years ago i found it incredibly hard to to negotiate because i didn't know what things were priced at but the biggest tip that got me in the right direction was understanding the leasing market and what rental rates should be so if uh if you negotiate on a property that's got inflated rent you're going to be paying too much like for example if your rent is 20 over market and you offer

on that rent, that means you paid 20% too much.

So you've actually got to, before you even put an offer in, you've got to understand what the true market rent is, back calculate it, whatever the day one rent is, it doesn't matter.

It's about the true market rent because that's what happens if your tenant leaves and you've got to find a new tenant and offer from that base.

You know, it's difficult and this is why there's professionals in this space.

Like this is not just finding what the latest four bedroom house sold for and pay a similar amount to it.

You've really got to do the math.

If you can't understand the local leasing market

then you're probably not going to be able to offer from a position of strength.

Second is understanding the yields.

Now, this is, again, similar to the leasing market.

It's just another gauge on how to offer.

If you understand that, like, you're buying a childcare and all the childcare's in that area is selling at 5% net yields, you can then divide the rent on that property by 0.05, so 5%, and that will be the number you need to offer.

So that's called working out the cap rate of the market, the capitalisation rate.

But the best way I've always been able to negotiate is understanding these two things and being confident.