Seeking industrial investment guidence

[Giulio Taranto]

hey there All, im currently building a unit behind my ppor and would like to venture into theworld of industrial investments.

Its hard to make the move from resi investing to industrial. I dont know where to start ! If others have taken the plundge id like to hear from you . How important is land size? When i have talked about land to other industrial builders they have always calculated how much the land would cost them per sq ft or sq meter. Why do they do this ? HOW do they do the math ? I know these may be obvious to some of you but if i dont ask, i will never know.
Things seem much different and im getting tierd of doing things that are in my comfort zone, i need something different!.

most importantly how do identify a good deal ?

Any guidence would help a whole lot.

 

[The Y-man]

I'd say Dazzling would be da man......

Cheers,

the Y-man

 

[markp]

Industrial investment?- As in buy an industrial building with an existing tenant?-Or do a developement?

 

[JIT]

Commercial Property Education

Guilio,

I'd first read all Dazzling's posts on commercial property on somersoft and propertyinvesting.com.

Also, read Martin Roth and Chris Lang's book on commercial property investment. The book will refer you to a few useful Aus. internet sites.

Beyond that, there's not much information on Australian websites/forums.

Could try overseas commercial property investment forums to get some general information. There a quite a few of these from the UK/US.

Or, buy commercial property investment books from Amazon, these are more specific to UK/US investors though, but can still be useful.

There are seminars too, Dolf de Roos ran one some time ago, but it was very, very expensive. Another Kiwi ran a cheaper seminar too, which was OK, but it's a bit light on information. Maybe PM Michael Yardney, who has been investing in commercial property for years, he may be able to give you some more direction. There are several commercial property investment seminars run in the UK/US.

You really need to be a lot more resourceful in order to gain the necessary knowledge before investing in commercial property. Hopefully, Dazzling will publish a book with his knowledge and experiences in it...I think that would sell quite well.

Other avenues, speak to commercial property real estate agents or property valuers and try learn something from them, or, ideally, as I think Dazzling did, meet an experienced and wealthy commercial property investor who is willing to share some of their knowledge and experiences with you...

I'm sure Dazzling would be able to help answer some specific questions if you post them here or on pi.com...

Good luck, let me know if you have any other ideas.

GSJ.

 

[APerry]

Chris Lang, who GSG mentioned is very knowledgable. I haven't read his book, but I know him personally and I'm sure the book would be a reat resource. He also has quite a bit of info on his web site www.gal.com.au.

Regards
Alistair Perry

 

[Dazz]

Hi Giulio,

I'm a little bit confused with your activity of building something behind your PPoR and how it ties in with your desire to invest in industrial props....i assume your PPoR is in a residential zoning ??

Anyway....everyone looks to, and concentrates on the land for many reasons, but the main one is that is where you make the money.

I suppose big land is better than small land, as access to the site is always crucial. but also, once on the site, vehicles need to be able to manouver easily. Tight turning circles, overhead obstructions, short doorway clearances etc automatically rule in and rule out prospective purchasers and prospective tenants.

Your property might look absolutely shocking, but if it has the right amount of laydown area and has good access for transport purposes, usually the tenant will overlook the shabbiness and take it anyway.

An industrial tenant is a far more robust and hardy beast than a residential tenant....usually with much deeper pockets. Dripping taps, unpainted walls, no carpets, leaky roof.....bahhh....leave it to them and say have a nice day.....it's all small fry to them and of no concern to me as Owner. They tend not to whinge as much.

How do you identify a good deal - same as with any other sort of property - look at the cap growth prospects, look at the tenancy if one is there, look at all the other attributes and say "Is this going to attract a good tenant".

A different hat and goggles you have to wear, that is true, which distorts your residential goggles as we have found....but things that aren't "pretty and nice" are not necessarily worse....you're dealing with truckies and tradesman who want to get in there and make a bunch of money, not fussy housewives with babies.

 

[Giulio Taranto]

thankyou for all your replies. thats reading material i will definatly look into.
i read somewhere that the finance side of things is alsoa little different? Banks are more reluctent to lend money on industrial purchases/ builds ?

What attracts me to industrial investing are the returns, apparently they are better, so why not start learning about it all. Thats what i plan to do. Let see where it leads me

A little while back i met an industrial builder, just the other day he came into my place of business and we got talking, the usual chit chat. Anyway after a little i asked him if he would have a sit down with me and share some of his knowledge of the industry with me over a coffee. He said he would, might be interesting to know how he has made his money dont you think ?

Im sure i can learn from him, its just that i feel nervous. Not even sure what to ask him except, where might be a good place to start investing ? He mainly deals in buying land and building warehouses, and it seems that he has deep pockets. Not sure how much use he will be to me, he seems to have finished the race and i havent even put my racing shoes on

 

[Dazz]

Not sure how much use he will be to me, he seems to have finished the race and i havent even put my racing shoes on

Exactly Giulio....match your "Mentor" with your current level.

If you are on level 1 or 2, getting a mentor on level 4 would be ideal. Seeking someone, or bumping into someone on say, level 9 may be daunting and inspirational, but frankly they will be nigh on useless to you....at this stage....as the techniques and properties they invest in will simply not be accessible to you. If you do try and 'latch on', you'll probably end up confused and bewildered, and the mentor will probably walk through frustration and inability to close deals.

Give it a few years to mature, and you'll probably find the previous mentor on level 4 is now not much chop, and the level 9 guy is really starting to make sense.

 

[Jen]

I'm in the same boat as Giulio as I want to learn about industrial RE but am having trouble. I have just bought Lang & Roth's book and am starting to read it but finding a mentor is another thing. Dazzling, your posts are a great source of info with good practical advice, in what seems to be a whole new ball game.

 

[Dazz]

Cheers Jen,

Perhaps I better clarify that we have been playing this different game now for less than 2 years now. Very much the little fish in this bigger pond. I've met some elderly Greek and Italian gentlemen during my travels who are very inspirational indeed. None even know how to switch on a computer, yet alone jump on an internet forum. There are some truly monster fish in this industrial pond, and we very quickly get out of their way when they swim past looking for something to gobble up.

In terms of development, we have zero experience in this field, so if you are looking to slap up some warehouses, then I am definitely not your man.

The only "development" we do is pick up tonnes and tonnes of other people's garbage and lease out the 'refreshed' industrial sites. Soil contamination and all those other nasty things you hear of, we try to steer well clear of.


Life is pretty stressful at the moment, as we are currently going through a long and protracted negotiation on a cracking shed where the much larger, like a hundred times bigger, Vendor is playing "hardball" with us. We are using every scrap of our 10 years of resi investing and 2 years industrial negotiating skills and we are floundering against these guys. Being 10,000 kms away from the action back in Australia isn't helping either.

 

[Giulio Taranto]

Hope all goes well for you Daz, sounds like if the deals goes through , the vendor has made you sweat for it. Good Luck
Sounds like you have learnt quite a lot in the two years you have been investing in industrial sites. What would be the most valuable lesson you have learnt ?

Jen, im going to buy that book also. Hopefully its a good read.