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Tim
17-05-2005, 05:55 PM
Where does a beginner start in this area?
Is Auckland the location to start looking at?
How much money do you need to get into these property types?
Your appreciated.

troyvdh
17-05-2005, 08:10 PM
Have a look at PFI....all industrial....

moimoi
17-05-2005, 08:55 PM
What sort of yield are you seeking?

1st mortgage at 65-70% the rest (unless you want a small 2nd mortgage in there) will need to come from elsewhere...

cheers
moi

nelehdine
30-05-2005, 09:33 AM
I agree with Troyvdh, PFI is the easiest and safest way to gain exposure to the Industrial Property sector. Most properties tend to be big-ticket in Auckland, $2m and up. For the average Jo-blo this is out of our league, PFI have a great portfolio, the div yield isn't very flash but there shares have been a good performer over the last few years. Another big advantage is when you want to exit it is $29.50 to your sharebroker rather than $29,500 to your estate agent !!

If your interested in USA industrial properties, have a look at Macquarie ProLogis Trust ( MPR ), listed on ASX and own 100+ distribution centres all over the USA. Div yield is near 10%, I have been buying over the last few months. Sold down to as low as 106 ... have gradually moved to 116 the last few weeks. A quality stock with a great div yield ( and DRiP ) ... go to www.macquarie.com.au for more details.

Bling_Bling
30-05-2005, 12:13 PM
quote:Originally posted by Tim

Where does a beginner start in this area?
Is Auckland the location to start looking at?
How much money do you need to get into these property types?
Your appreciated.


If you have to ask these simple fundamental questions, maybe you should do more hard yards in the residential sector before committing to commmercial.

A good tenant is the key to commmercial. Get a bad tenant and you can spend the rest of the time paying for all the outgoings and struggling to find a new tenant to replace existing one that is in arrears in rent. Commercial prop outgoings are very high and can eat away at your bank account. Also, get yourself a good solicitor that have experience in commercial tenant contracts. Alot of hidden traps for new players.

Halebop
30-05-2005, 12:51 PM
Bling its a pretty bad commercial lease that doesn't have the tenant paying the opex.

30-05-2005, 03:32 PM
Halebop You might get 0.5 cents in dollar with bad tennant if you are lucky

Tim
30-05-2005, 06:23 PM
Thanks for all your comments.
Nelehdine, 10% divi sounds good, but you cannot use franking credits. Also anything outside NZ in a few years will pay tax on unrealised profits. Does this mean one should stick to only NZ property trusts?

Halebop
30-05-2005, 06:27 PM
Don't count on the mooted tax measures coming in just yet Tim. Cullen has got an election and a lot of lobbying to navigate yet. Its all bollocks anyway as a good accountant or tax attorney will always find quite legal ways to at least defer and often reduce tax.

Westie
31-05-2005, 09:34 PM
Tim, one of the attractions of commercial is that the return is net of expenses. So if you hear of a commercial property with a 10% yield, this is in your hand. This is due to commercial tenants paying for outgoings. As Halebop mentioned, it is a poor lease if your tenant isn't paying for maintenance & all other expenses. Commercial should also give you longer leases than residential & less management as the tenant needs to keep the place ticking over otherwise their business suffers & they lose their bread & butter income.

There are of course downsides as well.

A good place to start is the book Commercial Real Estate Investors Guide - Making money as a commercial property investor in New Zealand by Peter Aranyi

Jones on property by Bob Jones is a good read too, if a little old