Boost Your Return by Refinancing Your Commercial Property
Commercial blog from the desk of Grant Rheuben
The largest cost of owning a commercial property is not the capital expenditure or the management fees; it is the cost of the mortgage.
We have recently arranged a dollar for dollar refinance of a commercial property loan of $380,000 for a client who owns a retail shop in Altona, Melbourne. The commercial shop has been owned for 5 years and provides an annual rental of $32,000 plus GST.
The client, on their current loan through a major Bank, pays interest at 7% plus ongoing fees of $1,500 per annum.
At Rheuben & Associates, we have arranged a new loan at 4.87% fixed for 3 years with no ongoing fees. This provides our client with $9,600 in their pocket every year. We have now placed the client in the position where their rent is 1.73 times the cost of the loan.
Our customer is now considering the purchase of another commercial investment by tapping in to the equity held in the current property and using the $9,600 extra cash now available each and every year.