The answer is never so simple.
I don't have Dazz's skill in commercial property, but I am quite happy investing in the stock market.
So I have a two pronged strategy:
residential property and shares.
Both have done well.
Commercial property in the right hands is a good money spinner, but it is MUCH HIGHER RISK, regardless of what anyone on this forum tells you.
And any asset class with higher risk, involves a higher skill level to manage it.
I am on the opposite side of a little commercial property at the moment.
Its my oldest business and unforuntately its time has come to an end. I don't have time to focus on it any more. Back in its day, in the late 1990's, I set up this business at the age of 24. It used to make me the same money as a national partner in a big for accounting firm, but not anymore.
Anyway the lease for the business has been on the same premises for 16 odd years.
A few years ago, realising business was deterioriating, I was contemplating a major re-fit. Approached the landlord to get 12 years of additional option leases.
Her lawyer must have heard of Dazz, because the lawyer started demanding all sought of things which if I agreed became into effect immediately:
*personal guarantee in addition to the existing rent guarantee (3 months)
*immediate additional rent increase (after having just done a market review several months ago)
*minimum rent increases of 4% a year.
All this for a set of options that back then wouldn't have kicked in for an additional 8 years (ie existing total lease + options was 8 years).
Stuff it, just bleed the business.
So fast forward 4 years, and the business has deteriorated much further. No longer making money, and I am never there.
Market review + final option was executed last year. Said yeah I will execute the option but never signed the new lease.
Suddenly her lawyers going into overdrive, one letter saying I have no lease, the next saying I agreed in writing to the new lease, and therefore its effectively in force.
My counter:
Do nothing, no correspondence, no communication.
Landlord starts coming to the shop every day, but I am never there.
Get a call from my friendly bank manager who's bank is also the lender on the property. Hey buddy, your bank guarantee expires end of feb.
Thanks mate I wont be renewing it. Done he says with a smile.
Suddenly the landlord is in do do, no signed lease, no bank guarantee after feb, and unlike residential property, commecerial property needs to be refinanced every so often years. And guess what:
Its refinance time!!!!!
Anyway ive got someone who wants to take over the lease. So I go to the landlord, you have this opportunity, take it or leave it. What can you do to me?
I told you several years ago, that your expectations were unreasonable, I was prepared to reinvest capital in the business, but not on the extortionary terms your lawyer was demanding, but all I heard back was the lawyers demands.
From my point of view:
yes I don't walk away with much on the final exit price for the business, but I don't care. This was my first business, made my money back many times over.
Most importantly my staff who have been with me many years all have perminant residency (they were on a mixture of work visas and student visas).
So the important assets, my staff, have all been taken care off and are very happy with me.
If this deal with the landlord and the new potential tenant doesn't go through, she will be in trouble.
So the motto of the story:
commercial property has its risks as well. The two previous landlords under my lease hold (especially the first one) did very well. The last one, not (partly because she also overpaid for the property)