niche - quirky - unusual investment

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galway_blow_in

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ok so can i start by stressing the fact that this is not something i myself am interested in , if its not against forum rules , i would like to detail an investment which a friend of mine has come across in the past few weeks , he told me about it the other night , its just so unusual i wanted to view peoples opinions on it as he asked me my view on it

the investment is quite literally an ATM machine in a shopping centre in the south east of the country , one of those units which is no bigger than a kiosk and usually slap bang in the middle of a shopping centre , the tenant is ulster bank and they have had a lease since 1994 , reviews every five years and the lease is a thirty five year duration , rent is ten grand per year with all management fees etc covered by the tenant

the current bid is 75 k, his reason being that while a 12% yield is of course excellent , even the bank were to remain on for the remainder of the lease ( 12 years ) , if they then exited , he thinks the unit would be good for very little bar perhaps a smaller than average coffee or ice cream kiosk

i didnt know what to say to him bar it sounded like a pure income play , he was looking about buying a one bed apt in the south east with a yield of about 6% but reckons the risk of a poor tenant is high where as it should not be with the above unit

quirky one ?
 
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galway_blow_in said:
i dont work for that estate agency and have no connection with them so does it matter ?, i didnt specify anything bar who the tenant is

what do you think of my friends idea BTW ?
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You've told the other bidder how far your friend is willing to go...

Because this is in a shopping centre, I'm assuming all that's actually for sale is the remainder of a 35 year leadhold. If that's the case, the buyer is left with nothing at the end, so it would need to get calculated on that basis.
 
The yield of course is good, the issue is what would it be worth at the end of the term if the bank did not renew. Who knows if there will be such a thing as ATM's in ten years time. Public telephone boxes were a big business once.

If the bank did not renew, there may well be something else, barely thought of now that would be viable, a parcel drop for instance.

For the right person, I think this is a good opportunity, a guaranteed return for 10 years, with a possibility of value at the end. But the right person has to be willing to tie up their money for the 10 years and take the risk that there will be very little at the end.
 

well it wasnt me who revealed who the estate agent was , thus narrowing it down , i doubt the estate agent scans the internet for this kind of information anyway

good point about perhaps having nothing of value at the end of the term
 

I have been thinking more about this, I am always afraid that there is something good out there that I don't know about, so I thought this might be it.

On fuller reflection I think not. For an asking price of €100k there are more than 5,000 houses for sale on daft.

No 15 is a 3 bed terrace in Garryowen in Limerick, it appears also from daft that this could also rent for about €14,000 per annum. Allowing for the extra costs involved in a residential property this is very similar to the €10,000 return for the ATM. However in 2029 this will still be a 3 bed terrace near the city centre. I know where I would put my money.
 

i would not buy it myself and even @ 75 k which i think is where its at , it not magic beans but its borderline gimicky in sofar as if the tenant shut down the unit or even atm,s become redundant in twenty years , you are left with nothing that tangible

disagree about garryowen however , no way will houses in that location deliver a rent of 14000 per annum , doesnt mean it isnt a good idea to buy in garryowen thought , limerick is still great value , i owned in dooradoyle but sold as it wasnt practical to drive ninety minutes to deal with issues and i dont know any electricians or plumbers etc in limerick , i got a very good price too and never liked the property itself , not usually enough reason to sell a place if its delivering but i could buy a family home in corbally for what i got for a two bed apt in dooradoyle and for me , over a lifetime , a house should be worth it , even the independence of not having to worry about management companies is a clear vote in favour of a house
 
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