Buying or building commercial property as an investment can be a great strategy, particularly for those looking for a consistent stream of income.
In the article below, we look at the return of investment of commercial and industrial properties and then take a look at how you can start investing.
One of the strengths of commercial properties as investments is their high rental return. While residential properties return only 3.4% of their overall value per year, industrial properties return about 8.1% of their total value yearly.
That’s a huge difference in a reliable stream of income.
So what’s the catch? There are a few. Let’s go through them:
Rental Income Risks
As always, a greater return indicates a greater risk. In regards to industrial properties & buildings, the high rental return relies on finding a reliable renter.
Residential properties are generally filled by tenants extremely quickly, but it can take months to find an appropriate tenant for a warehouse or factory space.
In any town or city, more space is allocated to residential building than industrial building. Finding a property to build on can be more difficult, and the council will likely hold you to tighter regulations before giving you building approval.
However, there is some goods news here. If you’re working with a trusted and experienced builder, they will understand regulations like the back of their hand. A quick phone call will give you an idea of what you can and cannot do. In these situations, your builder is your most important contact.
More good news: fewer people are building industrial properties than residential properties. This means you can often get industrial land for a better price, particularly if you choose your location strategically.
More Specific Needs
When building an industrial property, you’ll need to consider a number of requirements a tenant is likely to have:
- Access to highways.
- Space for heavy machinery.
- Appropriately large access points.
- Access to industrial utilities.
The location of your building is often extremely important, because location often provides value to the business operating out of it.
You need to make business as easy as possible to conduct from your space, so you will ideally find a place close to suppliers and other important networks.
Industrial properties tend to increase in value slower and steadier than residential properties.
Whilst residential properties have greater potential for capital growth, they also have a greater risk of going backwards.
How Much Does It Cost to Build An Industrial Building?
The average cost to build an industrial building is $166,065 AUD for the engineering, fabrication and installation of the building.
Site preparation, civil works, utilities etc are all additional costs.
For large factories over $400m2, the price can range from $100,000 – $400,000.
Rental return of residential vs. industrial properties: Property Observer)
Building Grain Sheds for Riordan Grain in Lara, Geelong
These enormous grain sheds are part of a $20 million dollars project for Riordan Grain in Lara, Geelong.
The structures allow transport vehicles to drive in, load up and ship Riordan’s product out. An excellent project on an impressive scale.
Take a look at the photos below, and a short testimonial with Jim Riordan, below:
Horse Hair Whorls Actually Do Indicate Personality
You might have heard of the idea before; that hair whorls on horses indicate certain personalities. It’s an idea that dates back as far as equine domestication itself does. Swirlology, Whorlology or Whorl Theory all suggest that you can gain insight into the kind of horse you’re looking at based on the patterns in their hair.
Is it even worth considering?
There is a lot of anecdotal evidence out there that suggests whorls are significant – if you speak to people who take note of whorls, they’re likely to say they do matter. But his could be tradition or bias; people who talk about whorls are just more likely to think they’re significant.
Is there a biological basis for the idea?
Yes, there is. It isn’t very clearly understood, but the embryonic tissue that ends up becoming facial skin (and therefore changes whorl patterns) is the same tissue that ends up in the brain. So it isn’t inconceivable that the two things could be correlated.
Is there scientific evidence for whorl theory?
Proper evidence eventually came about when researchers observed 1,500 cattle being moved from fields. As one observer recorded the position of their facial whorls, another recorded their behaviour and ranked levels of aggression or agitation.
They found that whorl positioning did have an effect on the behaviour of the cattle; if the whorl was above the eyes, the cow was more likely to become agitated. They also found different correlations between hair patterns and certain behaviours in guinea pigs, rats, foxes and humans.
The same pattern found in cows was found in horses; whorls that were above the eyes of the horse meant the horse was easier to agitate and harder to work with.
The researchers stressed that, although they had found significant results, they couldn’t predict detailed aspects of horse personality. Instead, high whorl positions indicated that a horse was more likely to be frightened and could therefore be more difficult to work with. They stressed the importance of using this information when training. Horses with high whorls should never be reprimanded for being difficult, because it’s often an indication that they are uncomfortable.
The positioning of a whorl does not define a horse’s personality. It is one influence amongst many, many others and can often be drowned-out. Think of it as a single voice in a symphony; although it makes a difference, it’s usually difficult to see the effect it’s having.
To see out horse arenas, download our brochure.