Oh I don’t know – lots of reasons I suppose….although I can’t tackle the “today’s market” comment, it’s far too broad and generalised to even make any sense whatsoever.

Some of the reasons why someone would pay $ 1,000 p.w. for a 500K prop, or a multiple thereof, might include ;

1. The property has a truss height high enough for their forklifts to operate in.
2. The driveway and rear yard are big enough for their semi trailers to turn around in.
3. The shopfront has the right exposure with the right amount of passing traffic.
4. The exit gate backs onto a Freeway entry exit point and therefore saves them alot of time.
5. They have existing operations next door and your property alone is suitable for them to store containers on.
6. They own the two other blocks either side of yours and wish to link up their operations.
7. They currently pay $ 1,500 p.w. and wish to move in to lower their rent.

That’s only a few that come to mind in a few minutes. There are plenty more.

I’d suggest before right off the massive “property market” and all that it entails just because the housing market doesn’t deliver high paying residential tenants, you have a good look around the very diversified type of property one can invest in.

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 lease

There’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.

Simon,

Mate….I know you don’t like being pushy….but…..aren’t you the gun hand when it comes to Mortgage broking over there and indeed based in Newcastle ??

Kriscot, I think the right person you are looking for is right under your nose mate, and has already replied to you. Check him out, you could do far worse.

Hi Renee,

Despite Richard’s kind words, I am certainly no expert in the field. Our group has purchased 4 industrial titles (all warehouses) over the past 2 years and we have a long way to go to match some of the wily masters of the game who have been playing it for over 40 years. We are mere pups in the game.

It would help if you would describe the deal a little. What exactly are you thinking of purchasing.

In terms of general tips, our group uses the following guidelines ;

1. Ensure the value of the underlying land is more than 85% of the purchase price.
2. Ensure the land is less than 10km from the CBD.
3. Ensure the title is green.
4. Ensure the nett yield is more than your finance costs.

We’ve managed to pick up our last three that fit the above criteria. They’ve basically been run down sheds / warehouses with awful tenants and no leases in place. After a whole bunch of confrontation, evicting, mucking out, repairing, advertising, negotiating, leasing and finally celebrating by re-valuing we have a few fundamentally good titles under our belt.

I wouldn’t recommend this approach for starting out. Our first was an industrial place with a 10 year +CF strata tenant already in-situ which allowed us time and money to learn the ropes. In that respect is has been good but the growth on that one has been poor due to the low land content. I’ve posted the details on that deal previously.

Good luck with your endeavours.

This is exactly what I have been saying for ages. People living in Australia who never get out into the big bad world don’t realise how insignificant Australians and everything to do with Australia really is.

In general Australians are very proud of who we are and what we are blessed with (culture / climate / environment etc) and don’t take too kindly being shoved in the category of irrelevancy. We are in most respects, and just have to get the tickets off ourselves. We really do have an inflated view of ourselves on the world stage.

One of the old US gents I work with said our entire country has an economy 1/6th of one of his states, and a total population of about a 1/3rd of one of his states, and they have 50 of them. I said yes that’s true, and just the way we like it.

Where I live and work…it’s extremely dangerous to be pidgeon holed as an American, and I am constantly reminding the locals, despite my looks, that I am not an American. It doesn’t work though, I look and act like an American to the local Muslim lads, and therefore may as well be one in their eyes.

What I’ve found works that breaks down the barriers between the two cultures – which are massively apart from one another – is to be receptive to their culture. I need to be ‘cos I’m in their patch. I’m quickly learning their language and respect most of their local traditions – although I would never expose my wife and girls to it.

We’ve got ex-pat white women from Unicef and Red Cross etc here working, but the local Imams think they are a joke and treat them as such. Nice enough ladies, but way out of their depth. After one or two years of trying to impose their Western standards on the local women, they give up and go back to wherever they came from.

The one thing I never do is judge their culture and traditions with my Western standards. It will never work – and I’ve found it makes no sense to do so.

What I expect when I come back to Australia is for the same courtesy to be extended. It appears that expectation is not being met.

Nickey,

I think you are thrashing something rubbery to death and getting nowhere.

Steve’s little ‘sifting tool’ isn’t a formula, it isn’t a rule and it isn’t a solution. If I recall he mentioned all of that in his book, and doesn’t want people to religiously stick to it or grind it down to the gnats ****.

What it is, is a really really rough and ready back of the fag packet – well not even that – 11 second little mental calculation that you can use sitting behind the wheel of your car that approximates a 10.4% gross rental return, which assumes that there is roughly 3 or 3.5% allocated for all outgoings over and above mortgage payments such that there may be something left in the kitty for the residential purchaser.

It’s not rocket science – you’ll go crazy trying to turn the ‘rough and ready’ into rocket science.

If you are still not comfortable, then get your calculator out and do the detailed calcs on any particular property which should only take you 1 minute. Then you can forget about the 11 sec rough and ready guide. If you are too busy to afford 1 min. calculating the fin details on a deal – you’re in the wrong game.

Sorted.

Holy smokes…six turkeys to just whet the appetite…you must be a big eater !!

Outstanding work Gatsby – the first true spirit of Xmas…I bet the people you mix with there will appear to be very fortunate and in great health compared with your experiences in India.

Not if you keep eating 6 turkeys ol’ bean !!!

G’day Ron,

Spent a total of 4 years living there, as a wee tacker in 78 and 79 in a company house in the suburb of Lamington near North Kal P.S. – great place to grow up….and much later 2 years renting there whilst attending WASM in my mis-spent youth back in 90/91.

We rented a small dive in McDonald Street right opposite the School of Mines. It was a 3 bedroom shack on a narrow block of about 350sqm worth about 65K back then. We paid $ 170 p.w. rent for it. Worth every penny too.

Even when completely blind drunk, we could always tell it was our house when crawling back after a big party by the impressive array of 160 odd Woolies shopping trolleys that we had acquired in the backyard. Absolutely fantastic fun playing with those when blotto.

Simply having to stagger across the road to get to the lecture hall in time to fall asleep up the back of the class after a big night out getting on the turps and going to skimpy bars was well worth it. Location was perfect, and I’m sure in very very high demand by similar upstanding students / tenants.

Always paying our rent on time and not whinging about anything, both our Landlord and hopeless PM thought we were model tenants and left us alone for the full 2 years, never an inspection to be had. Watch out for that – they’re pretty slack – or they were if the rent is paid.

Have a chin wag to Cabo Wabo on this forum – I think he has some more recent experience with the town, and may even live there.