On 18/01/2014 15:27, tim...... wrote:

"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.

It is not particularly unusual for small industrial units in this area.
There are some, of similar size, that rent out for about 15% more per sq
ft, but they can stand empty for a few months when they become empty.

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).

I stopped renting properties to my own companies when I retired. Since
then, I have had normal commercial leases.

Small industrial units are a much better investment than commercial
properties as a whole. As they attract start-up businesses, they are in
constant demand. If anything, the recession increased the demand as more
people decided to go it alone. It also helps that nobody seems to be
building them these days.

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.

It is perfectly possible to work that out for yourself, as I did.

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!

Small units usually sell by word of mouth, when you learn that somebody
is thinking of expanding or retiring. The same goes for renting them
out. When I last had a tenant leave, I had enquiries about the unit
three months before it became available without any need to advertise it.

Colin Bignell