Property Outgoings to Watch in Selling Investment Property

Assume you want to sell a commercial, industrial, or retail property. In that case, keep your property outgoings in line with other properties of similar type and size in the neighbourhood. A property or leasing manager can explain how that balance compares across the industry.

It isn’t easy to sell a commercial property with above-average outgoing costs. When buying a property, the buyer always examines the outgoings and compares them to what the market sees in comparable properties. 

Removing Sale Hurdles

You don’t want your outgoings to be a stumbling block in the sale process. Before the sale and settlement, an astute investor will ask questions and investigate the property’s outgoings.

Outgoings can also scupper a lease to a new tenant if the tenant is required to pay a proportion of outgoings and those outgoings are above market averages. If a new tenant is concerned about the level of outgoings in a property, they can request a lease be negotiated for a gross rental. As a result, the landlord may bear the entire burden of the tenancy or property’s outgoings payments.

Types of Property Outgoings

Some property outgoings are “controllable,” while others are “uncontrollable.” The ‘uncontrollable’ outgoings are typically water, sewer, municipal rates, and electricity. They account for significant property expenses and will continue to rise. These ‘uncontrollable’ outgoings each year account for approximately 30% of the property’s operational costs. So, the property owner can only ‘control’ certain property costs.

As a result, the only way for a property owner to prepare and control property outgoings for a future sale is to keep an eye on and focus on the ‘controllable’ outgoings. Maintenance, cleaning, security, common area costs, and services or amenities used by tenants or customers of the property will all be included.

Steps Landlords Can Take?

So, how are you going to solve this problem? Make sure you have an excellent, experienced property manager working on your property who understands the importance of budgeting your outgoings to industry averages. They should also include your outgoings in a building business plan that tracks the property’s expenditure throughout the fiscal year. When things become difficult or expenses exceed the budget, the property manager can collaborate with you to resolve the issue before it becomes a problem.

AUTHOR
John Highman
0417 221 108 | j.highman@rwsp.net
Ray White Commercial Gold Coast
Shopping Centre Sales and Leasing Specialist

John Highman of RWC Gold Coast writes this article, and he can help you further with your sales or purchase requirements. John is a specialist in Investment Sales and Leasing.
He can be contacted at 0417221108 or j.highman@rwsp.net