Reply to: Keeping money in the company vs dividends

[JustKeepSwimming]

So you've heard about offices and retail and extrapolated that to industrial too - of which you have admit yourself you have no idea.

Yes, i've herad, like I've heard that Tories are doing tulip in the polls. The economy is interconnected, if you think office, retail and residential prices are being hammered but industrial is bucking the trend then you're delusional.

Where else can you get a 8% return and have capital growth?

What capital growth? Q3&4 2022 saw a 26% fall in industrial prices, double the rate of commercial as a whole. Ironically artificially inflating yields due to leases, but when those leases expire? Rates will plummet.

[jamesbrown]

Commercial property is a fringe investment ? What world are you living in.

The world where sensible people don't invest in clown factories.

[rashm2k]

Once again, there's no evidence that you can distinguish between a well thought out argument about investing in commercial property and sinking everything you own into a clown factory. You should hawk your fringe investment ideas in General.

Commercial property is a fringe investment ? What world are you living in.

[jamesbrown]

Once again, there's no evidence you've given or well thought out argument that you're making here.

Once again, there's no evidence that you can distinguish between a well thought out argument about investing in commercial property and sinking everything you own into a clown factory. You should hawk your fringe investment ideas in General.

[rashm2k]

It’s unclear to me why you’re hawking commercial property, especially as you have “no experience of it, lol”, but it’s really no different than scootie hawking bitcoin. It’s asking for trouble and you probably don’t understand the full implications of what you’re proposing (e.g., creating a CIHC) or cannot otherwise expect the average contractor to understand these implications. If you want to make more money as a contractor, focus on improving your skillset, rather than gambling.

I'm not sure that a physical income producing asset is quite the same as bitcoin. I did not say I don't have any experience, I said I don't own any yet. Once again, there's no evidence you've given or well thought out argument that you're making here.

What you chatting about, absolutely all commercial property is being hammered right now. Office vacancy rate has not been this high in decades and thats not accounting for the absolutely huge amount of office space that will be becoming vacant in the short to medium term.

Retail properties have been dying a slow death for over a decade.

Industrial I have no idea about but I don't see why it would be doing much better considering all other sectors are being hammered.

If you're lucky enough to swim in outside waters, max pension contributions, accrue retained profits, entrepreneur relief, retire.

You state 12k return on 150k light industry property, ie 8%. That is not a good return in the current market.

So you've heard about offices and retail and extrapolated that to industrial too - of which you have admit yourself you have no idea.

Where else can you get a 8% return and have capital growth?

[JustKeepSwimming]

why? While I appreciate the discussion, just posting statements without some research or well thought out argument is kinda useless, not just to me but everyone else that reads this thread.

I have seen the scarcity (confirmed by multiple surveyors) and first had the level of demand for light industrial, I also know the rents being paid by more than a handful of tenants as well as the purchase price of such units. Now obviously is it harder than residential, much like being a contractor is harder than being a permie but the rewards are worth it.

What you chatting about, absolutely all commercial property is being hammered right now. Office vacancy rate has not been this high in decades and thats not accounting for the absolutely huge amount of office space that will be becoming vacant in the short to medium term.

Retail properties have been dying a slow death for over a decade.

Industrial I have no idea about but I don't see why it would be doing much better considering all other sectors are being hammered.

If you're lucky enough to swim in outside waters, max pension contributions, accrue retained profits, entrepreneur relief, retire.

You state 12k return on 150k light industry property, ie 8%. That is not a good return in the current market.

[jamesbrown]

It’s unclear to me why you’re hawking commercial property, especially as you have “no experience of it, lol”, but it’s really no different than scootie hawking bitcoin. It’s asking for trouble and you probably don’t understand the full implications of what you’re proposing (e.g., creating a CIHC) or cannot otherwise expect the average contractor to understand these implications. If you want to make more money as a contractor, focus on improving your skillset, rather than gambling.

[rashm2k]

If you want an exit plan from losing your shirt, not investing in commercial property is a good bet.

why? While I appreciate the discussion, just posting statements without some research or well thought out argument is kinda useless, not just to me but everyone else that reads this thread.

I have seen the scarcity (confirmed by multiple surveyors) and first had the level of demand for light industrial, I also know the rents being paid by more than a handful of tenants as well as the purchase price of such units. Now obviously is it harder than residential, much like being a contractor is harder than being a permie but the rewards are worth it.

[jamesbrown]

I'm trying to figure out an exit plan from contracting, hence looking at commercial property.

If you want an exit plan from losing your shirt, not investing in commercial property is a good bet.

[rashm2k]

How much do you currently have invested in commercial property?

Nothing atm lol, but I do have quite a bit in residential - and I don't wany any more. It's quite common within my circle of family/friends to have some residential investment.

I'm trying to figure out an exit plan from contracting, hence looking at commercial property.

[pr1]

Why is that?

Office or shops are no good unless you're doing a office to resi conversion, but small light industrial is very difficult to find, so that's what to buy.

Sure it takes a little longer to rent out if the location isn't perfect, but when it does it stays rented out for longer (and with much less hassle than residential).

Each to their own I guess, but I have been watching the market for over a year now, and I know quite a few people who rent out commercial units, the yields are good. For a 2000 sq ft light industrial unit (e.g. bodyshop. mechanic etc) it's £1k a month in rent, something like that might be around £150k, which is a solid yeild for pretty much zero effort once tenanted.

And as always with interest rates at 5/6% cash is king, which as contractors we should really have plenty of.

If you read the full article then it's not all commercial properties, just office space.

How much do you currently have invested in commercial property?

[rashm2k]

Take it you aren’t a commercial surveyor because believe me that’s a crap idea…

Why is that?

Office or shops are no good unless you're doing a office to resi conversion, but small light industrial is very difficult to find, so that's what to buy.

Sure it takes a little longer to rent out if the location isn't perfect, but when it does it stays rented out for longer (and with much less hassle than residential).

Each to their own I guess, but I have been watching the market for over a year now, and I know quite a few people who rent out commercial units, the yields are good. For a 2000 sq ft light industrial unit (e.g. bodyshop. mechanic etc) it's £1k a month in rent, something like that might be around £150k, which is a solid yeild for pretty much zero effort once tenanted.

And as always with interest rates at 5/6% cash is king, which as contractors we should really have plenty of.

Comical suggestion in general, but you could hardly have timed it worse with commercial property values plunging

If you read the full article then it's not all commercial properties, just office space.

[Lance]

Comical suggestion in general, but you could hardly have timed it worse with commercial property values plunging

buy the dip.... or summat..

[jamesbrown]

Comical suggestion in general, but you could hardly have timed it worse with commercial property values plunging

[eek]

The best solution IMO is to keep the money in the ltd company, take out the ~50k in dividends and salary every year, but the keep the rest and put them into a commercial property.

That's better than a warchest, putting say 200k/300k into a commercial property with a 10% yield would get you 20/30k to live, that's at least a 6 month warchest, at the same time it's a pension plan and you also get capital appreciation and are beating inflation.

Take it you aren’t a commercial surveyor because believe me that’s a crap idea…