Industrial Property

[CAD Guy]

Hi Guys!

Just wondering what you can tell me about industrial property off the top of your heads.

I came across a couple of warehouses for sale with current tennants on long leases, and it seems that the returns (at face value, at least) are better than most residential returns that I've found in recent times.

I was just wondering what kind of hidden costs are involved in industrial purchases? How do banks tend to see them as an investment? Do any of you own industrials, and if so how do you find they perform?

Regards,

CAD Guy

 

[Michael Croft]

CAD Guy,

For industrial property read; the higher the return the higher the risk.

The question you have asked requires a thesis type reply which you probably won't get. Your local CIT will have a few books on the subject if they run property courses.

Depending on where you are industrial rent returns can be from 12 to 18% with the tenant paying most outgoings, but be warned and reread first sentence.

regards, MC

ps. I have and do invest in industrial and commercial property and this is one of the reasons I trained as a valuer.

 

[bundy1964]

Hi Cad

Personaly I don't touch industrial due to the risk of outsourcing overseas.

Shops and offices are my pices of the IP market as it is not practical to go to China to buy your dodads direct or have to visit your dentist in the Bahamas.

LVR of 80% or under can be a killer Terms may be as bad as 10years P&I under those conditions you do need a great yeild just to keep up with your payments.

It also pays to know a good lawyer if the tenant starts to go pear shaped on you and they are good at reveiwing leases.

bundy