Condo-retail property in north of Scarborough

[JesseLee]

I`m signing a deal purchasing a condo-retail space in a new Asain style mall in north Scarborough...the Landmark. Its just at the corner of Steeles and Markham. From the presentation and brouche it looks very promising.

The sale rep. tells me that the expected rental income would be $100(net) per sqft per year and the TMI is bore by the tenant. The price is $210,000 for a 165 sqft (net) store able to sell food and drink and snack but no cooking and exhaust allowed. It`s in the food court area in the mall. Based on the $100/sqft rental and a 75% LTV mortgage the cash flow is quite good, giving the potential of appreciation over years.

I`m a newbie to this type of commecial investment, the sale rep. looks nice and honest and I havent yet found a reason not to trust him but I`d like to seek a second opinion.

Any expert up there could share some experience and views?

Jesse

 

[invst4profit]

I am by no means an expert but my advice is "never" take an agents word at face value. Do your own research on what the rental rate is and more importantly what the demand is in the area for the type of space you will be providing. Demand is what will drive the value. Try running an add prior to purchase to test the market. Having a renter before closing the purchase would be best but keep in mind renting commercial space can take a considerable amount of time. Stall the purchase untill you have the answers. Make confirming a renter part of your conditional offer, this will likley be rejected but who knows stranger things have happened.
Don`t be pressured by time, better to lose a deal than be stuck with a product without a market.

 

[JesseLee]

QUOTE (invst4profit @ Mar 17 2008, 07:54 AM) I am by no means an expert but my advice is "never" take an agents word at face value. Do your own research on what the rental rate is and more importantly what the demand is in the area for the type of space you will be providing. Demand is what will drive the value. Try running an add prior to purchase to test the market. Having a renter before closing the purchase would be best but keep in mind renting commercial space can take a considerable amount of time. Stall the purchase untill you have the answers. Make confirming a renter part of your conditional offer, this will likley be rejected but who knows stranger things have happened.
Don`t be pressured by time, better to lose a deal than be stuck with a product without a market.

Thanks Greg, I will take your advice very seriously, its generic gold one. And meanwhile I`m also expecting some REINers who are familar with that area and that type of investment and borrowing some ideas from them as well.