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.

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Key Highlights

  • Building Area: 528m2
  • NLA: 814m2• 15 + 10 year lease
  • 76 place centre in prime catchment position
  • Security: $148,500 bank guarantee
Purchase Details
Asking Price
$5,800,000
Purchase Price
$5,575,000
Deposit (assuming 65 % debt)
$1,951,250
Stamp Duty
$288,743
Building Report*
$900
Solicitor Cost*
$7,500
Valuation*
$4,000
Total Cash Required
$2,252,393
Purchase Price + Purchasing Cost
$5,876,143
Net Annual Cash Flow Return
$295,000
Net Yield on Property
5.29 %
Net Yield Accounting for Purchasing Costs
5.02 %
Cash-On-Cash Returns
Deposit Needed = % + Costs
$2,252,393
Cost of Loan (Assume 4.5 % pa on 65 % debt)
$163,293.75
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 %

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