ou decide to purchase of an industrial property that has four tenants, with remaining leases terms ranging from 2 to 5 years. The property has a purchase price of $5 million, and the costs of acquisition for stamp duty, legals and other fees is 4% of the purchase price. Each of the four leases is rented at current market rates and each lease returns a net rent of $100,000pa with annual rental increases of 4% (payable in arears). Outgoings for the property are a total of $150,000 per annum of which $100,000 are recovered from the tenants as part of their net leases. One lease expires in two years, one expires in three years, one in four years and one in five years. Your trusted property consultant has advised you that they do not expect the current tenants to renew their leases and it will take 6 months for you to find a new tenant to take over each of the spaces once they are vacant. The building is starting to show its age and needs $250,000 of capital expenditure spent to undertake repairs in two years' time to ensure that future rents from tenants do not reduce. You intend