Inside Commercial Property | Stories of Commercial Property Going Wrong

The latest episode of Inside Commercial Property - With Rethink Investing has landed!
Phil Tarrant and Scott O’Neill paint the picture of the worst-case scenarios for commercial investors and how to solve them.
Phil and Scott acknowledge that, like any other investment, betting on commercial real estate has its own set of risks. With that, the duo lay out the potential situations that can put commercial investors in a pinch before discussing practical and strategic solutions that can help them mitigate their losses or completely avert such a crisis from happening.
And while there is no foolproof way to ensure a successful investment, the pair stress that having the right mindset is an investor’s greatest tool to overcome any downturns.
They also touch on how different types of commercial properties are currently performing before unpacking what 2023 will hold for the sector.
Learn more about Rethink Investing:
Website: www.rethinkinvesting.com.au
Linkedin: / scott-o-neill-0b0aa151
Facebook: / rethinkinvesting
Instagram: / rethinkinvesting
About Scott O'Neill
Rethink Investing was founded by Directors Scott and Mina O’Neill in 2014, with the core goal of helping everyday Australians retire from their jobs. After retiring at the age of 28, Scott and Mina now live off the passive income generated by their personal property portfolio. Their award-winning agency was named Australia’s fastest-growing buyer’s agency in 2017 & 2018 by the Australian Financial Review, a BRW Fast Starter company. In 2019 they won the ‘Your Investment Property’s Strategic Investor of the Year’ award. Scott and Mina are the authors of the best-selling book ‘Rethink Property Investing’. Scott hosts Australia's top-rating monthly podcast, Inside Commercial Property.
#insidecommercialproperty #rethinkinvesting #scottneill

[@lambo-nut3793]

Great podcast “Rethink”. Let me tell you a story. Back in 2017-18 I was very early into a new job. I was floating around the commercial property arena going to seminars and learning how it all works. Yes I paid for courses to learn more, got close to achieving success but ultimately failed. With commercial I did a course, got a property finder to help, got legal help, and course seller help. I had over $100K to invest. I wanted a commercial property with a good lease, decent options for renewal and actually paid a profit after all costs. I had an office commercial property found for me, down in Sydney. After all costs the numbers looked good. My cash was enough to deposit into the property and the commercial bank loan would pay for the rest with leasing paying for the repayments for the loan. The bank evaluation came back lower then expected after my property finder spent weeks chasing down and evaluating properties, my educator (course seller) was also making calls informing me it is a good investment, my legal team were informing me to make sure everything is right with me and I’m comfortable with taking the investment, my loan broker was doing all the paper work making sure the numbers worked, the seller of the property was pushing for the sale through their estate agent and I was dealing with new pressures through a new job while dealing with all this going on in the background. In the end, the low evaluation (from the bank) needed to be negotiated lower, which the seller didn’t want to drop the price to match the evaluation of the bank that was lending me the money. So the only option I had was to stump up more cash to match the price needed (which I didn’t have) or borrow more money from the bank with legal representation with signed documents that I would pay back the money as fast as possible. In the end I made the decision to “PULL OUT COMPLETELY” from the deal because I didn’t feel right about the whole thing. I’d be in a negative position from day one. No more legal team, no more property hunters, no education seller’s help, no broker for loans and no commercial investment property. After making this decision, I felt I chickened out of something that looked scary but could have been the catalyst for my commercial property journey. Once covid hit in 2020 my decision to pull out of this particular commercial investment was justified that I made the right decision at the time. Businesses start operating from home and so did the business operating from the commercial property I was going to buy into. I was purchasing an office investment. People leave home to go to the office to work. With this taking place, what's the use of the office investment if people are requested to work from home. I wouldn’t be able to make payments on the investment to keep going and would of lost my full deposit once the lease for the investment would of run out during covid. No one saw covid coming, TOTALLY UNEXPECTED! So I’m glad I didn’t get involved. Which is why I like Rethink. When the time comes for me to invest again Rethink will be the go to place. My $100k is now invested else where, helping my future cash flow work harder.

[@scottoneill1965]

thank you for the comment. This is a scenario we have seen many times before. You can often just order another valuation and the second one more often than not comes in at contact price. Obviously that wouldn't be the case if you paid too much for the asset in the first place. We choose to invest in Industrial, retail and medical more than office. However good quality office space will always have a place. We hope to hear from you in the future, there will be some good deals around over the next 12 months or so as interest rates have improved the buying conditions ☺