On Saturday 18 January 2014 15:27 tim...... wrote in uk.d-i-y:


"Tim Watts" wrote in message
...
On Saturday 18 January 2014 12:42 Nightjar wrote in uk.d-i-y:


In case you think my rate of return is unrealistically high, a
cousin of mine has just bought a couple of buildings rented to a
garage and a tyre fitting business for £140,000 and his rental
income from those is £17,000 pa, or 12.14% return on capital.

I was going to ask - I thought 5% was more the norm? Is yours
domestic property?

No he rents commercial property

I've told him before he is extremely lucky to have a "single"
commercial property that give him this RoR.

As a "base-load" investment for "normal" people, commercial property
is generally recognised as a do not touch with a barge pole option.

Randomly choosing a commercial property to "buy to rent" could as
easily see you getting a 25 year return of 0% income and a loss on
capital invested, instead of the "luck" that Colin has had (though
ISTR he rents the property that he owns, to a company that he owns, so
he has no risk of the tenant doing a flit - this is not something that
99% of owner can rely upon).

Of course, you can get professional advice that will stop you buying
such a "dog" property, but such advice isn't cheap and generally isn't
available to people with less than 7 figures to invest.

And even with access to advice, the really good property will still be
going
to those better connected than you. In many cases commercial property
really does only become available to normal people to buy, because no
other mug will!

tim

Wise words...

Normal people (particularly ones who have at some point been tenants) at
least have a basic understanding of the domestic market - what's
expected, "would I live there" and rental rates (easily checked by a
rummage on Zoopla etc).

Vetting new tenants is a fairly well understood process as is dealing
with them when they default (acknowledged that sometimes this is not
always easy, back to good vetting in the first place).

I would not have a clue about commercial[1] - except that I see a lot of
commercial property sit empty for long periods.

[1] Perhaps shops. They might be OK. But again, many can sit empty for
long periods and shops almost always want to remodel and fit upon moving
in, a problem domestic tenants don't raise.



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