Best way to sell unusual property

[yeahbutno]

We're thinking of offloading one of our properties, and it's a bit of a complicated situation!

It is currently let on a commercial lease at £9,000 per annum to a sole trader, with 8 years left to run. If it were a "normal" commercial property, I reckon a buyer would be wanting about a 6% yield, and that would make the property worth about £150,000-ish.

However, the complicator is that the building could easily be used as a private residence - would require planning permission but that would be a formality - it has been used for residential in the past, and other parts of the building are also currently in residential use. With vacant possession, and sold as a residential property it would probably be worth around £250K.

The existing lease is written outside of the L&T act for tenure, so the landlord can guarantee vacant possession by 2014 at the latest. On that basis, we're hoping that someone would be willing to pay around £200-210k for a decent medium-term investment.

Obviously, the existing tenants would be the most obvious candidates to buy, but if they choose not to, we'd need to sell on the "open market". Does anyone have any advice on the best route? I'm reluctant to sell via a residential estate agent, as I doubt they would attract a suitable buyer; however, I'm also concerned that a commercial agent might not hit the exact target market either. I'm thinking an auction might be the best way to find an investor willing to take a punt on something a bit unusual?

All thoughts welcome!

TIA

[ronbrownlow]

If you don't want to achieve a good price then the auction route is the best way! People go to auctions to pick up a deal.

Your property needs to marketed properly to the right kind of buyers. As you've already noted - Resi agent nor commercial will target the right investor unless you're lucky enough to find a resi agent that really knows his investment market which, are few and far between.

The route I would recommend would be a 'consultant' or 'buyer' You can then (dependant on their terms) sell without incurring any cost and be assured that that the consultant will contact developers/investors who specialise in just this sort of thing and not people who watched a 'Sarah Beanie episode' and think they can do it!

There are plenty of people out there that would go for this sort of deal if the figures are as you say.

If you need help then let me know on this forum and we'll arrange a chat in private. Remember - targeted marketing and could be free!

[yeahbutno]

Thanks Ron.

Please forgive my confusion here. You're suggesting marketing it myself to the target market?

[ronbrownlow]

Sorry, should've been more direct!

I work as a property consultant and buyer for lots of differant investors. I have investors who specialise in exactly this type of project. I am retained by them so there would be no cost to you if I find you a purchaser.

This would be dependant on your area and whether or not your figures and potential for resi planning are correct.

Taking the above into account - even if it's not logistically possible for me to do it then I would still highly recommend that you find a good consultant in your area and not make the mistake of using a resi or commercial agent.

If you want to give me a few more details then that would be great and we can see if I can be of any use.

Hope this helps.

Ron

[yeahbutno]

Fair enough!

I'm going to approach the existing tenant first of all but if that comes to nought, I'll drop you a PM Ron.

[ronbrownlow]

Sounds like you've a very saleable asset but your tenant is the best option for both of you. Best of luck.

[daveyjp]

From my recent visits to Property aurctions its one place to avoid for a bargain - there's plenty of money out there still and investors are keen to spend.

Three years ago we sold six of seven industrial units (800-1000 sq ft each) for an average of £24,000. The last of the seven went to auction in February (in three years industrial rents for this property haven't risen) and it sold for over £60,000 - guide price was £30,000.

If you do go to auction pick one a major auction house where people actually turn up to bid - the ones I go to get 300+ people in the room.

[ronbrownlow]

I hear what you are saying and generally you get more than the Auctioneers guide price... But, that's why guide prices are there - in order to get more, so the auctioneer looks good. Are you suggesting that the price you got was more than you could have achieved by employing someone who knew their target marget?!

If you are employing a consultant then you win both ways - ie: if the consultant doesn't achieve the best price you always have the option of the auction.

I can't remember a time where the auction beats targeting marketing.

[SteveP]

Without knowing the property, what use classes it may be granted, where it is located, etc it is hard to offer specific advice. 6% is a pretty low yield in terms of commerical property, but I'll assume you know your local market.

Almost certainly the best way of getting the best price would be at auction if the circumstances you describe apply. As daveyjp as said, choose one of the big firms of auctioneers.

ronbrownlow says
If you are employing a consultant then you win both ways - ie: if the consultant doesn't achieve the best price you always have the option of the auction. however I'd say that you have no way of knowing that you are getting "the best price", or even a better price than you would get at auction. Good auctioneers provide targeted marketing, have an extensive knowledge of your local market and who the players in it are.

Alternatively try a well known local commercial agency. The fact that the property may be suitable for a change of use some years down the line may add value, but all the same it is an investment property and a commercial agent will also target the marketing to suit the property.