Hi everyone,
My husband and I are interested in PI (after becoming inspired by rich dad books as well as steve’s books). Just wanted some thoughts on investing in commercial property (more like warehouses with offices). What to look for, helpful resource links and just general advice. We are new to this and would like to keep our options open as to what type of property to look into.[blush2]
Chris & Mike
Dazzling is the man when it comes to these types of investments. Also every now and again I find fairly good deals on this website;
http://www.realcommercial.com.au
It’s not that flash but some good deals do pop up on it…eventually.
Good Luck…g7
There has been a lot written about commecial property in the forum recently so try a search and see what others have posted. Try reading some of Dazzling’s posts as he is very good at sheading the light on the + / -‘s.
For my 2 cents worth i would just say that financing a commercial property may mean that without additional security your borrowing maybe limited to between 70/80% of the purchase price. Some lenders load the interest rate charged and set up costs will generally be higher than they would for a residential property.
But in saying all that if you find a good high yeidling Commercial IP they can self fund the debt.
Richard Taylor
Residential & Commercial Finance Broker
Ph: 07 3720 1888
[email protected]Richard Taylor | Australia's leading private lender
Thanks for the response guys, we’re still trying to navigate around website hence lack of imagery for our user ID on messages but appreciate your time for reading our messages.[blush2]
Hi Chris and Mike,
That’s a pretty broad request…..and very difficult to answer.
Perhaps I can best help by asking a few specific questions ;
1. What is your specific level of knowledge in the subject so far
2. Have you seen any specific deals that take your fancy
3. What do you feel most comfortable with
4. What is your upper budgetary limit
5. Have you ever read a commercial leaseThere’s a bit, but not a lot in common with ressy stuff. Some people won’t touch it with a barge pole, other’s who are happy to have a bit of a mix and other’s still who far prefer it to ressy stuff.
It’s certainly not an area for the inexperienced. I’ve met some fairly large sharks swimming in these waters, and although I’m starting to grow my own set of nippers, they are certainly no match for the large hungry institutions and interstate funds who I regularly have to fight with.
The lack of good solid learning material on the subject matter is clearly evident from all of the constant questions on the forums. I gather the people and institutions with the most experience are either not very computer literate and aren’t interested in sharing their knowledge…..seems they are too busy making money from it.
It can be a profitable area if you apply yourself correctly. Let us know how you go.
Dear dazzling,
I must confess hubby and I have not got much experience and knowledge in the area of commercial property at all hence our post hoping to find more resource links to become more knowledgable in the area. We have looked around at residential properties and thought it would be a good idea that we should also expand our search to include commercial properties to increase our chances of finding postive cashflow investments.
So our knowledge is minimal, our upper monetary limit would be approx 800K. We like the appeal of having leases which were signed up for a few years as well as making one larger deal (for us it’s a larger deal but I’m aware 800K is not a large amount in commercial property) rather than a number of smaller deals . We are not trying to cut corners to start building our portfolio, and are aware that one larger deal will require just as much research, time and sweat as putting together many small deals. We want to have as much knowledge in the PI as possible to reduce our “risk” in investing into property hence our Q on the forum.
We do not have a specific property in mind, but wanted to know where we could get more info about what to look for and certainly the questions that you have posed will give my husband and I more things to think about, but it certainly does sound like it may be a minefield for first time investors like ourselves.
Will look at previous forum postings on commercial properties (but seem to have probs accessing at moment!)
Thanks[hair2]
Try reading “How Investing in Commercial Property really works” by Martin Roth & Chris Lang. Available at Dymocks for $29.95
Best wishes,Amanda
“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”For my 2 cents worth I got my grounding working for a commercial developer in the late 1980s. The only good thing that happened in 1990 was I got married. The rest of the year was all bad. I saw a lot of people who had invested in small factories and offices go broke as the recession cut in. As a rule of thumb a commercial investment value is based on the return do if you have a building with a 10% cap and it is rented at $25,000 per year the the building should be worth$250,000. What happens if you lose the tenant, what is the property now worth. With residential property this does not happen. When dealing with the banks you will often recieve a 90% lend or higher with residential or only around 60% for commercial. Also remember that in my view if you are going to invest in commercial it should be for blue chip property. The entry point for this type of real estate is normally a lot higher than residential. If you are interested in commercial I would look at perhaps investing in a shopping centre via a syndicate, this way you risk is low and generally the returns and capital grow are good.
Nigel Kibel
http://www.propertyknowhow.com.au
Australian and New Zealand The United States Property Researcher and education
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Hi Chris and Mike,
Even better than reading “How Investing in Commercial Property really works”, call the author Chris Lang on 03 9654 3022 ad have a chat with him. He also has a web site http://www.gal.com.au
Regards
Alistair Perry
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