Commercial/Industrial Property over BTL?
Discussion
Just exploring a few options at the moment as we may have an opportunity to buy 2 commercial units next to one we have just bought and moved into. This coincides nicely for me with a couple of other little things coming to fruition which will leave me with a bit of a sum to either invest or spunk on cars.
So..I've done BTL with some decent success we trimmed right back on the domestic stuff so only actually have a single one now which has super long term T's who give us no issues so it's ticking over. Round here the sum I'm looking at would get 4 x domestics at 75% LTV with a yield of around 8% maybe slightly more come Brexit/winter.
The commercial I'm looking at would return 12% but I think I'm right in thinking there's still interest relief on commercial?
I guess Pros on the commercial are:
Less red tape/legislation
Government not trying to push LLs out of commercial
Tenants (in theory) responsible for the upkeep
Longer tenancies
The site we are on consists of 3 x units and the last remaining one will be for sale in a couple of years due to retirement of the owner. The whole parcel of land would be about an acre and ideal to turn over to housing eventually.
Cons
Can have extended void periods
I will be next door to 2 tenants (unit we are looking at will split into 2 nicely)
Bigger deposit required and higher purchase costs
Anything else I'm missing?
The void periods are a bit of a concern. I have priced the projected rental lower than our unit was estimated at but the area is not prime industrial but rent is cheap cheap. Newer and more expensive units I've noted a few sat for 12 months. Ours will be more affordable starter units. May even be able to split down further than 2. £1000PCM rent on 2 (around 4000sqft each)
I know there are lots of investors on here so would really appreciate any input.
So..I've done BTL with some decent success we trimmed right back on the domestic stuff so only actually have a single one now which has super long term T's who give us no issues so it's ticking over. Round here the sum I'm looking at would get 4 x domestics at 75% LTV with a yield of around 8% maybe slightly more come Brexit/winter.
The commercial I'm looking at would return 12% but I think I'm right in thinking there's still interest relief on commercial?
I guess Pros on the commercial are:
Less red tape/legislation
Government not trying to push LLs out of commercial
Tenants (in theory) responsible for the upkeep
Longer tenancies
The site we are on consists of 3 x units and the last remaining one will be for sale in a couple of years due to retirement of the owner. The whole parcel of land would be about an acre and ideal to turn over to housing eventually.
Cons
Can have extended void periods
I will be next door to 2 tenants (unit we are looking at will split into 2 nicely)
Bigger deposit required and higher purchase costs
Anything else I'm missing?
The void periods are a bit of a concern. I have priced the projected rental lower than our unit was estimated at but the area is not prime industrial but rent is cheap cheap. Newer and more expensive units I've noted a few sat for 12 months. Ours will be more affordable starter units. May even be able to split down further than 2. £1000PCM rent on 2 (around 4000sqft each)
I know there are lots of investors on here so would really appreciate any input.
Jon-f1zhn said:
Just exploring a few options at the moment as we may have an opportunity to buy 2 commercial units next to one we have just bought and moved into. This coincides nicely for me with a couple of other little things coming to fruition which will leave me with a bit of a sum to either invest or spunk on cars.
So..I've done BTL with some decent success we trimmed right back on the domestic stuff so only actually have a single one now which has super long term T's who give us no issues so it's ticking over. Round here the sum I'm looking at would get 4 x domestics at 75% LTV with a yield of around 8% maybe slightly more come Brexit/winter.
The commercial I'm looking at would return 12% but I think I'm right in thinking there's still interest relief on commercial?
I guess Pros on the commercial are:
Less red tape/legislation
Government not trying to push LLs out of commercial
Tenants (in theory) responsible for the upkeep
Longer tenancies
The site we are on consists of 3 x units and the last remaining one will be for sale in a couple of years due to retirement of the owner. The whole parcel of land would be about an acre and ideal to turn over to housing eventually.
Cons
Can have extended void periods
I will be next door to 2 tenants (unit we are looking at will split into 2 nicely)
Bigger deposit required and higher purchase costs
Anything else I'm missing?
The void periods are a bit of a concern. I have priced the projected rental lower than our unit was estimated at but the area is not prime industrial but rent is cheap cheap. Newer and more expensive units I've noted a few sat for 12 months. Ours will be more affordable starter units. May even be able to split down further than 2. £1000PCM rent on 2 (around 4000sqft each)
I know there are lots of investors on here so would really appreciate any input.
If you know the market, because you are an occupier yourself, and you are confident you can keep it occupied, then it could be a good option.So..I've done BTL with some decent success we trimmed right back on the domestic stuff so only actually have a single one now which has super long term T's who give us no issues so it's ticking over. Round here the sum I'm looking at would get 4 x domestics at 75% LTV with a yield of around 8% maybe slightly more come Brexit/winter.
The commercial I'm looking at would return 12% but I think I'm right in thinking there's still interest relief on commercial?
I guess Pros on the commercial are:
Less red tape/legislation
Government not trying to push LLs out of commercial
Tenants (in theory) responsible for the upkeep
Longer tenancies
The site we are on consists of 3 x units and the last remaining one will be for sale in a couple of years due to retirement of the owner. The whole parcel of land would be about an acre and ideal to turn over to housing eventually.
Cons
Can have extended void periods
I will be next door to 2 tenants (unit we are looking at will split into 2 nicely)
Bigger deposit required and higher purchase costs
Anything else I'm missing?
The void periods are a bit of a concern. I have priced the projected rental lower than our unit was estimated at but the area is not prime industrial but rent is cheap cheap. Newer and more expensive units I've noted a few sat for 12 months. Ours will be more affordable starter units. May even be able to split down further than 2. £1000PCM rent on 2 (around 4000sqft each)
I know there are lots of investors on here so would really appreciate any input.
Your biggest risk would be void rates if vacant...check out the rateable value and small business reliefs in combination with your own property.
There is nothing wrong with simple space...I have a large commercial estate which is 98% occupied at high town centre rents, but provides basic space because people will pay for flexibility and a nice location.
If you get some tennants in on long FRI , then that's a result ,much less hassle than resendential ...no calls at 10pm telling you the boiler is broke !!
Guess it depends on area , I've seen commercial offices empty near me for years , similiar property's further down the M4 snapped up in months
I've seen a few landlords turn harder to shift commercial buildings into smaller "easy in easy " out style setups , more manageing and hands on , but less eggs on one basket
That blog post was really good
Guess it depends on area , I've seen commercial offices empty near me for years , similiar property's further down the M4 snapped up in months
I've seen a few landlords turn harder to shift commercial buildings into smaller "easy in easy " out style setups , more manageing and hands on , but less eggs on one basket
That blog post was really good
Im in West Yorks but cheers I'll have a chat with a few agents. I think a lot of landlords get too greedy some off the rents are crazy. Our old rented unit was 10k 3.5 years ago it was initially advertised for 18k this year. Back down to 16k now.
We should be able to get this new one out of rates and low rent anyway there aren't many units where we're are that are under 12k RV. All the newer stuff is 30k PA to run a 5000sqft unit with rent/rates we should be able to offer 2 x 4000 units at about 10k each and under the 12k RV. Maybe!
We should be able to get this new one out of rates and low rent anyway there aren't many units where we're are that are under 12k RV. All the newer stuff is 30k PA to run a 5000sqft unit with rent/rates we should be able to offer 2 x 4000 units at about 10k each and under the 12k RV. Maybe!
I’m a commercial surveyor in West Yorkshire so happy to help.
Industrial rental values have been going up over the last few years as there has been an increase in demand but very little built, sheds are the best performing commercial sector by far.
Capital values have increased too, especially for more modern stuff and for smaller units that people can put into their SIPPs.
As long as a unit is clean and tidy it should let really well.
Feel free to PM me
Industrial rental values have been going up over the last few years as there has been an increase in demand but very little built, sheds are the best performing commercial sector by far.
Capital values have increased too, especially for more modern stuff and for smaller units that people can put into their SIPPs.
As long as a unit is clean and tidy it should let really well.
Feel free to PM me
Im not a landlord but a solicitor. Legal fees will be a bit higher than residential. Plus you will have them each time you relet. Although it seems to be getting more common for tenants to pay some or all, depending on market conditions.
Definitely consider using a pension fund. Depending on your tax position they can be very helpful.
Definitely consider using a pension fund. Depending on your tax position they can be very helpful.
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