Getting started in entry level commercial property

[auckland investor]

Is it a good idea to go straight into commercial property and skip residential?

What are entry level opportunities, retail, small office, warehouses?

What sort of price range would an entry level opportunity be in Auckland?

What are all your experiences with buying commercial property and what advice would you have for a beginner?

[Davo36]

Well that's a lot of questions mate! Need a book to answer them. So I'll try here but read Peter Aranyi's book Commercial Real Estate which you can find over at EmpowerEducation.com.


1) I got straight into commercial real estate, never owned a residential rental. But I spent 4 years selling/leasing commercial real estate so knew the ins and outs pretty well. I also have a father who was into this for years so could bounce ideas off of him. There are quite a few tricks to it.

2) Entry level opportunities might be along the lines of a small shop, office space or industrial unit. These will be unit titles. They can range from say $150k up to say $500k. After that it just gets bigger and bigger.

3) Prices. Well it's hard to find anything cheaply just now. Commercial property is pretty tightly held just now and there aren't many bargains out there. What you want is something that is not over-rented, possibly a bit under-rented. How will you know this? You have to know rental rates for property in the area you're looking at. This is via research i.e. just looking around at what people are paying.

4) Advice for a beginner:

• Have a go. You have to actually buy a property, deal with the lease, tenant etc. to understand it.
• Start small. Buy a little one to start with and practice on that. See if you like it.
• Read books but stay away from the seminars. The books are good, the seminar guys are useless.
• On the first deal, get a valuation. Just so you are not doing something really silly.
• Get out and talk to real estate agents. Or even via the internet, ask questions etc.
• Put in a few offers. If you get the property, cool. If you don't, you'll learn a bit about the whole milieu.

All the best.

[AMR]

On your last thread, you mentioned you were struggling to get enough deposit for a unit in West Auckland? With commercial your deposits would be even higher.

[Rosco]

Generally banks lend 65%, so definitely need a bigger deposit.

Commercial is all about the tenant. Get a good tenant who stays long term, and commercial is great. But if your tenant goes bust, or you end up with an empty building, commercial can be a nightmare!

Residential is generally easier as there are more tenants available, and in a worse case you can generally drop the rent $50 per week, and quickly get a new tenant. Meanwhile with commercial you could easily be empty for 6 months.

Ross

[Re@der]

Another entry level option is via syndication. You get to watch how the professionals do it then can follow up on some of your own

[Bluekiwi]

If you want to be in commercial, then no point really going into residential, as you might as well start learning the ropes in commercial now small scale and work up.
In saying that you will need more money due to the lower LVR of banks.

Now if you are going commercial, I would recomend Olly Newland as worthwhile paying as mentor, in this case.
I have met him in a free interview chat, as I take up from time to time with people offering such free meetings (not that I sign up to any).

But if you are wanting to learn, and he will check and analyse each deal, and assist you with the tricks and purchasing of commercial, and tell you if what you are looking at is a good deal or not.
Then he would be your man in my humble opinion. (not knowing anything about commercial).

[Bsteven456]

Actually as a Real Estate Agent I also think so residential is generally easier as there are more tenants available, and in a worse case you can generally drop the rent $50 per week, and quickly get a new tenant. Meanwhile with commercial you could easily be empty for 6 months. As same as someone said it above there.

[Maccachic]

It’s the lease we can do
These are uncertain times for commercial property owners, tenants, developers and contractors. Christchurch lawyer Josh Orton offers some insight into commercial leasing process best practices

http://www.nzlawyermagazine.co.nz/Cu...2/Default.aspx