CIP... Industrial

How do I start, I want to look at this as possibly diversifying from resi


Any help welcome

 

You'll need to set some parameters for starters:

• Leased or vacant?
• Single or Multiple tenants
• If leased, type of tenant (Govt, A Grade, P/L or Sole trader?
• WALE or length of lease remaining
• Which state?
• Urban or rural?
• Budget
• Size
• OTP, Old or new/newish
• ........

 

I understand
looking for safe, lower risk, leased, quality tenant


Is this possible at this price ??
$2-3 M

 

@MTR - Depends on the location, market sector, wind direction etc

 

Pay @Beano to be your consultant

 

That'd only be a ground lease in some second rate nation which you can't get into or out of and need to be a native, a permanent resident or partnered with same.

 

There are commercials and commercials. Some that need a lot work but lots of upside eg the IM I posted on Longburn brought at 11% net yield 12 mths later 21% then there are others like mine 6.4% 14 years later still 6.4% no work no upside you can generate.

 

That's NZ

 

@MTR - something like this may tick a few boxes: linky

Just off the main drag in Wollongong.

Will sell on a strong yield, probably around 2.5-3.5% nett

Something like this spread over several shops but I don't see this being a great site (below grade/concealed, no parking at front etc).

Multi-unit resi in Newcastle

Won't be cheap

 

is this a strong yield 2.5-3.5 nett
This is like resi??

 

That's nett not gross returns.

Land value is lower than resi, so less liability for land tax as well.

 

But i would think 7% net min otherwise whats the point?

 

So 3-4% above the interest rate. Not gonna happen with a secure tenant, either purchase vacant or develop but then you're dealing with a greater % for risk.

This is a 5%: linky

 

Thx for link

So what has happened in the days of Dazz these Higher yields achievable, even if buying with tenant in place at around 8%

Why has this changed I am gobsmacked and would not expect anyone to buy with such low yields as CIP more risk in the main??

 

Return is comprised of demand, growth, risk, interest, competition etc.

In the last 10+ years interest rates have dropped to record lows (pull out 5-6% of returns), competition has increased due to larger pool of investors (super funds with a few spare $M), knowledge (internet) etc.

The better the site, the tighter the yield - you will get capital growth over time either through change of use/zoning or scarcity (location/proximity to transport etc).

 

When I was young (4yrs ago) I could get 6.4-6.5% net yield on land only deals
Funded at 4.2%

 

Ok
This makes sense now

thx, but not good for me

 

The other option is to develop: risk + risk + risk.

This will give a much greater return - Buy land at the right price/zoning/location, build the right product at the right price, lease at a premium.

 

no thanks

 

Could also look at the leased sites, crunch your numbers and lowball it regardless to achieve the desired return.