Jack and Brandon were guests on the NZ Everyday Investor podcast/video episode titled What’s the Deal with Commercial Property? Download or watch it here…
Darcy Ungaro, creator and host of the NZ Everyday Investor podcast, said the episode set a new record for the highest number of downloads in the first week of release. Seems there’s high interest in commercial property.
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A little something about Darcy Ungaro, the host…
Darcy is a financial adviser who has a degree in Economics majoring in Finance at Massey University in Auckland as well as Level 5 cert. of financial services – sure he’s smart but more important, he’s still learning!
The NZ Everyday Investor: The core mission of the show is to ‘Improve levels of wealth via the accessibility of financial knowledge for the everyday person.’
Guests include economists, bitcoin investors, property investors, psychologists, business people, retirement advisers, and even everyday people!
Listen to something that’s good for your wealth!
Commercial property – Jack Revill and Brandon Wilcox join me to discuss what makes it different from residential property investment.
It’s still property investment, but unless you’ve done it before, it’s not what you think it is.
In an environment of lower returns on investment across many asset classes and property in particular, in order to get a good return, you have to factor in the expected capital gains.
With residential property, there’s generally a trade-off between getting a good yield (good rent relative to the value of the property), with expected capital gains. An Auckland 3 bedroom home may go up in value nicely over time, but a property in say Hamilton, may provide a better yield.
Commercial property is different
- The tenant usually pays for all outgoings
- You can influence the value more directly by improving the lease terms
- Access to lending is often a bit tighter, and more expensive
- Vacancies can last longer, but there could be more certainty with cash flow over time
On the whole, there are more positives than negatives and it’s a true-ism that residential property investors often ‘grow up’ to be commercial investors later on. I can see why.
There is, however, a huge elephant in the warehouse here – the barriers to entry are higher with commercial. Not only do commercial properties often cost a lot more than residential, but if purchasing direct, you have to have a much higher deposit to even get a foot in the door.
Jack and Brandon have a broad discussion with me around the benefits of commercial property as well as touch on some different ways you can partake in this investment: Direct, through a syndicate and through a fund (unlisted or listed).
This is a must-listen for anyone thinking of getting into a commercial property at some stage. Newland Burling, the company Jack and Brandon work for, also do a commercial property master class and it’s a worthwhile exercise to head along – let them know you found them via this podcast. You won’t get a deal but you’ll be the teacher’s pet!