Keep an eye on commercial properties that fail to sell: Chris Lang

Most investors believe keeping an eye on the daily media will provide you with the best opportunities.

Others will mainly focus upon distressed sales like "Mortgagees' Auctions".

However, by doing that, you are effectively pitting yourself against considerable competition.

And while the property itself may be first-class, you are unlikely to end up with a "top deal".

How to make it work for you

That's not to say you shouldn't consider commercial properties being auctioned or put to tender.

However, your best interests will not be served by actually participating, as part of that advertising campaign.

You see, as the market improves, vendors will start to become "a little high in the stirrups" as far as the price expectations are concerned.

As such, the auction/tender campaign can often serve as an education process where vendors discover what the market considers their property is really worth.

However, once the sale date passes without achieving a result, the general buying public loses interest and tends to move on to the next approaching auction or tender.

This is when you swing into action!

If that particular property remains unsold after three or four weeks, you need to understand two things:

1. There is nothing necessarily wrong with the property itself; and
2. The vendor is most likely now ready to meet the market on price.

Therefore, what the daily media provides you is an upcoming inventory of potential opportunities — which you then need to monitor.

But you should only begin spending time investigating these properties a week after the sale date has passed. And then, only the properties which fit your investment objectives.

Avoiding the competition

Wouldn't you prefer to investigate a buying opportunity without the added pressure of competition?

Developers and investors often want to sell their properties as soon as a tenant has committed to a new lease or exercised option.

But in the current economic climate, it can take anywhere from three to five weeks before the formal lease is actually signed after reaching agreement on the commercial terms.

Therefore, what I've done to help my clients is build up a close-knit group of agents who will keep me abreast of any such opportunities.

You see, until the lease is actually executed, those agents cannot offer the property to the open market. However, an offer to lease has been signed; and the first month's rental paid.

As such, the deal does exist, but it still needs to be formally documented.

Bottom line: With these opportunities, my clients are able to reach an agreement to purchase the property, subject to the lease being executed on the agreed commercial terms.

But the real bonus is the saving in advertising expenses (now the vendors can make a quick sale, without any advertising costs) because it ultimately translates into a reduction in the purchase price.

And that means a win-win outcome for both parties.