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chatmonkey chatmonkey is offline
Newbie
Join Date: Apr 2005
Location: Hertfordshire
Posts: 7
Renting commercial premises - this thing called YIELD

Hey everyone, been having a browse around for the last couple of days, have to say it's great to come across other people facing similar stresses and problems!

I'm trying to start a business with a friend and we're gonna need to rent a retail premises. We saw something we liked and made initial enquiries just to get an idea of how it works, and found that you're treated like a bunch of jokers if you're not a big national chain

Anyway, will revisit that when we're ready, trying to put together a plan at the mo and need to do some costings.

Can anyone explain the idea of yield in renting premises? Am I right in thinking that it's a percentage of your profits or turnover or something that landlords ask for in addition to the rent? Is this standard? What's a good figure and what's a rip-off?

Thanks a lot!
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James Smith's Avatar James Smith James Smith is offline
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Join Date: Mar 2003
Location: Abingdon, Oxfordshire
Posts: 2,044
Thats a new one to me.

Generally you pay a fixed sum per month, and its upto you if you make money or lose it.

It is possible it could be some form of low rent deal, with a % profit cut but this is certainly unusual.

Do however do your homework if you are looking to lease. Prehaps go and sit with a local estate agent who deals with commercial property and get them to explain it all. It isnt as easy as leasing residentially as the contracts etc are complex.

You will need deep pockets if you are leasing a property of any size from day one, ie you may be seen as not serious if you have limited funds.

Rgds,
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Statler's Avatar Statler Statler is offline
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Posts: 838
From the Office of the Deputy Prime Minister website:

Investment yield: Annual rent passing as a percentage of the capital value.

http://www.odpm.gov.uk/stellent/grou...ol_608040.hcsp
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Fraser Edwards Fraser Edwards is offline
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Join Date: Jul 2003
Posts: 27
My understanding is that yield is what a landlord can make from a property.

i.e. you buy a property worth 10k and rent it for 1k a year so you have a yield of 10%

It's more a figure that a landlord would be interested in than one you need to worry about when renting.
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James Smith's Avatar James Smith James Smith is offline
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Location: Abingdon, Oxfordshire
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I quite agree Fraser - that is where you normally get it from I dont understand ti the other way around.

Perhaps the agents where suggesting that the rents being offered by the original poster would give a lousy yield the landlord?
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Statler's Avatar Statler Statler is offline
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And if you really want to get into it, then you may find the following of interest:

http://www.davidlawson.co.uk/Files/Finance_all_084.htm
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chatmonkey chatmonkey is offline
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Join Date: Apr 2005
Location: Hertfordshire
Posts: 7
Hey thanks, that makes sense of it.

Quote:
Originally posted by James Smith
Perhaps the agents where suggesting that the rents being offered by the original poster would give a lousy yield the landlord?
Yeah the estate agent said something about the rent being higher for us (than it would be for a high street chain) as the landlord would be looking for a higher yield, around 9% rather than 6%.

Didn't want to ask the estate agent (he would barely give me the time of day as it was), would rather look dumb here than out there, thanks guys!
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Artman Artman is offline
Entrepreneur
Join Date: Mar 2005
Posts: 37
It does appear that unless you have a whole lot of money you are treated as a bit of a non entity with regards renting a commercial property.

I have recently tried to rent a shop in order to open a gallery and came away from an agents feeling as if i was something on the bottom of his shoe.
However contrasting to that, i also tried to rent an empty shop local to me - missed it by a day or so - where the landlord was dealing directly with potential tenants.
Although the shop had been taken by the time i arrived the landlord was helpful, full of encouragement and in terms of customer service a very long way from the agent i saw.

I would hate to think that ALL commercial agents are the same. When someone is starting out it is encouragement and helpful advice that is needed - not put downs!
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