The value of property has gone up or is it just in-rate with inflation, or that %?Simon It’s generally in-rate with inflation. I mean, you can’t go higher than % from the annual rate and generally, it’s CPI’s, they’re all % is the industry standard. Bust does vary. I mean, you know, people do try to get more.Ryan And that’s up to what? Do you negotiate that at the start of the contract or can negotiation ate it mid-contract?Simon No, it’s start of the contract. If it’s a plus , which is generally a standard sort of a lease term for a small office. You would put those rent increases in the initial contract in the beginning.Ryan And what do you mean by plus ? Sorry.Simon So, plus means you’ve got a -year lease and at the end of that term, you have the option to renew that to another -year lease if you wish. So, if someone wanted that particular office, you’ve got the first right of renewal before it goes back on the market.Ryan Okay. So, that’s for the business who’s renting from you. They can get another -year lease from you. So you can’t just kick them out and get someone else in.
They have the first chance to re-lease that property from you.Simon Yeah. It is a renewal of a lease. Depending on the case by case.Brisbane Property Valuers Generally, at the end of that -year, if you, as a landlord is unhappy, then obviously, that’s the break of the lease.At that point you can move them on.Ryan Okay. So, we’ve talked about some of the differences between residential and commercial.And I think I’ve got my head around it, you know, you’re generally going to need a larger deposit. Rental yields tend to be higher for commercial properties. You’ve got expenses are paid by the tenant themselves. You’ve got longer leases with increases annually throughout that lease. And then, you’ve also got potentially longer vacancy rates in order to get someone in but once they are in, it’s going to be more consistent for you. Is there anything – we were going to talk about what are the advantages.
They can get another -year lease from you. So you can’t just kick them out and get someone else in. But basically, all of those things except the longer period of vacancy rate are the advantages of investing in commercial property. It seems to make a lot of sense to me. I guess, people would need a larger deposit in order to get into it. So, is there anything that we’ve missed that people should know about investing in commercial property?Simon The biggest thing is – one of the disadvantages, I would say, would be that typically they have low capital growth.