Creating a plan part 3 – Buy and Hold by Kyron | Nov 26, 2013 | investing, plans and strategies, property | 4 comments Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on Google+ (Opens in new window) Related 4 Comments Shane on November 28, 2013 at 2:04 pm Kyron, A question for you regarding the last sage of your investing journey. The move into $1 million of mortgage free commercial property. Does Steve suggest a specific kind of commercial property? i.e. retail, industrial, or office? And what is the reasoning behind his choice? I think he also suggest splitting the commercial investments i.e. 2 x $500,000 investments instead of all the eggs in one basket with 1 x $1 million property. Shane Reply Kyron Gosse on November 28, 2013 at 8:35 pm Hi Shane Steve does not suggest any particular type himself, that is what I like about Steve, he informs you on all aspects of investing and lets you make your own mind up. Having said that, looking at what Steve is buying in America for his fund, it is mostly industrial. As I am not yet at the commercial phase I have not researched commercial properties too much, however some little things I have picked up along the way is that with the internet a lot of retail is dying and it is getting harder to find tenants. With industrial you need to buy something medium sized. Too small and you are likely to get start up businesses which either go under, or grow and need to move to a bigger space. Too large and it is likely that the property is very specific and will only ever suit 1 particular tenant. Another thing that someone pointed out to me is that there is lots of importing going on, and therefore industrial storage space in and around airports are doing very well at the moment. Ultimately I would love to own storage units, such as storage king. Your customers don’t live there, they get awesome rent for such a small space, people just lock their stuff up and walk away. It is relatively easy maintenance and I think it would just be a cashflow gold mine. And as you own hundreds of the things you will never be 100% vacant. Completely agree with you re splitting up into 2 x $500,000 than 1 x $1mil property. Another thing he does is buys properties that have more than 1 tenancy. For example a large title with 3 ‘shops’. Normally you will have something called the ‘anchor tenant’ who the lease and yield is worked around. This might be the equivelant to The Warehouse, where they have a few other shops in there as well. For example Whangarei, has a cafe, a photo booth, a tailor, ice cream shop and a travel shop. In this case The Warehouse would be the anchor tenant and the others would be the icing on the cake. Reply Shane on November 29, 2013 at 3:32 am Kyron, Great reply thanks. You say you haven’t researched commercial much but there are some real nuggets in there. For example, the trend towards warehousing near the airport to cater to importers is a real gem. Also multi tenancies with anchor tenant is definitely the way to go, to spread risk. I still think commercial retail investments can be successful but you need to be selective of the tenant and market segment they are servicing. Online will hurt some retailers but not all. For example, service industries such as hair dressing and fast food are probably pretty safe. Hard to get a haircut on the internet :-). Shane Reply Kyron Gosse on November 29, 2013 at 10:18 am Yes I imagine it is very difficult to get a haircut or a hamburger online. I imagine that 3d printing will be a major factor when considering buying into commercial now days as well. That probably pushes manufacturing tenants out. Completely agree that in commercial you buy based on the tenant where as in residential you buy based upon the property. Just finished the latest reno, so will have that video up soon, not as exciting as the last one unfortunately, but hey. Got the valuer coming round on Tuesday so hopefully good news 🙂 Reply Submit a Comment Cancel reply Your email address will not be published. Required fields are marked *Comment Name * Email * Website Notify me of follow-up comments by email. Notify me of new posts by email.